Fixed Income - Fixed Income Section 2

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46. Which of the following would most likely have the lowest priority of claims in a bankruptcy proceeding?

  • Option : B
  • Explanation : Among the listed for priority of claims senior secured debt comes first, followed by senior unsecured debt followed by senior subordinated debt.
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47. An organization issued the following categories of option free bonds. The bond with the highest yield most likely is:

  • Option : C
  • 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.
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48. Which of the following is most likely to be a category of secured debt?

  • Option : B
  • Explanation : Second lien debt is a category of secured debt. Debentures and subordinated debt are categories of unsecured debt.
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