Question

QQ7. 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

1. A Both Statement II and Statement III are correct and both of them explain Statement I
2. B Both Statement I and Statement II are correct and Statement I explains Statement II
3. C Only one of the Statements II and III is correct and that explains Statement I
4. D Neither Statement II nor Statement III is correct