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Economics › Finance/Capital Market

Economics › Finance/Capital Market

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Consider the following statements:
Statement I: As regards returns from an investment in a company, generally, bondholders are considered to be relatively at lower risk than stockholders.
Statement II: Bondholders are lenders to a company whereas stockholders are its owners.
Statement III: For repayment purpose, bondholders are prioritized over stockholders by a company.

Which one of the following is correct in respect of the above statements?

Options

(a)

Both Statement II and Statement III are correct and both of them explain Statement I

(b)

Both Statement I and Statement II are correct and Statement I explains Statement II

(c)

Only one of the Statements II and III is correct and that explains Statement I

(d)

Neither Statement II nor Statement III is correct

Answer

(A)