Fixed Income Q119

119Which of the following is least likely to be a reason for issuance of subordinated debt?

A
It is less expensive than issuing equity and does not dilute existing shareholders.
B
Investors are willing to buy it because the yield being offered is adequate compensation for the risk perceived.
C
It is ranked higher in the priority of claims and thus investors feel secure.

Option : C
Explanation : Subordinated debt is a form of unsecured debt and is not ranked higher in the priority of claims.

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