Explanation : Based on seniority ranking junior subordinated bonds has last right among
the listed bonds. Hence, they have the highest credit risk than the other
two options. Hence, these would offer highest yield.
Explanation : Analyst 2 is correct. In case of bankruptcy, the claims on assets are likely
to be paid off as per the seniority ranking.
However, in some cases, the claims might be paid off in a way that is not
in line with seniority ranking. Hence, secured bondholders also face some