If a bond issued by a company ranks ahead of another bond for repayment in a winding up, this is described as

• A. Callable.
• B. Perpetual.
• C. Subordinated.
• D. Senior.

Answer: (D)

In winding up, creditors are paid in order of seniority. Senior debt has the first claim on the company's assets after any secured claims are addressed, so a bond that ranks ahead of another bond for repayment is describing itself as senior to that other bond. This means it gets paid before the other bond from any liquidation proceeds, reducing its risk and usually supporting a lower yield. The other options don’t describe priority of claims: a callable bond relates to whether the issuer can redeem early, a perpetual bond has no maturity date, and subordinated debt sits lower in the repayment order and would be paid after senior debt.