Which of the following apply to both sureties and guarantors?
A) If the surety or guarantor pays the debt, that person has no recourse against the primary
debtor.
B) It is an arrangement in which the surety or guarantor agrees to pay the debt of another
under certain circumstances.
C) The surety or guarantor becomes secondarily liable on the debt.
D) The obligation arises only if the debt cannot be collected from the primary debtor.
B
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Zheng Sen's Chinese Take-Out had earnings before interest and taxes of $4,000,000 last year
The firm has a marginal tax rate of 40 percent and currently has the following capital structure: (a) Calculate the firm's after-tax return on equity (ROE) and earnings per share (EPS). (b) If the firm retires $4,000,000 of preferred stock using the proceeds from an equal increase in long-term debt, what would have been the after-tax return on equity (ROE) and earnings per share (EPS)? (c) If the firm retires $4,000,000 of preferred stock using the proceeds from the sale of 500,000 shares of common stock, what would have been the after-tax return on equity (ROE) and earnings per share (EPS)?
In an inefficient market, securities are typically in equilibrium, which means that they are fairly priced and that their expected returns equal their required returns
Indicate whether the statement is true or false