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Which of the following groups is paid first when a firm liquidates?

Commerce
JAMB 1994

Which of the following groups is paid first when a firm liquidates?
  • A. Preference shareholders
  • B. Debenture holders
  • C. Ordinary shareholders
  • D. Cumulative preference shareholders
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Correct Answer: Option A
Explanation
preference shareholders is a term used in venture capital contracts to specify which investors get paid first and how much they get paid in the event of a liquidation event such as the sale of the company.

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