2.9.2 Subordinated Debentures Flashcards
1
Q
What are subordinated debentures?
A
These are debentures that will be repaid during liquidation only after corporate debts, including regular debentures have been paid.
2
Q
Who generally issued subordinated debentures?
A
They are generally issued by companies who have already borrowed a lot of money and needed to borrow more.
3
Q
Subordinated debentures have a ___credit risk and thus pay out __yields
A
high, higher
4
Q
What is the priority in liquidation?
A
- Secured debt holders
- Administrative expenses
- Unpaid wages
- Unpaid contributions to employee benefit plans
- Customer deposits
- Taxes
- Unsecured debt holders (debentures)
- Preferred stockholders
- Common stockholders
