Libby sees a tombstone advertisement for a new issue of Southwest Barge subordinated convertible debentures. The bonds will carry an 11-1/4% coupon, are convertible into common stock at $10.50, and are being issued to the public at 100. The proceeds of the issue will be used specifically for purchasing new Southwest barges. Libby's concerns about the issue could include:
A) she should not be concerned as the bonds will be first in liquidation.
B) the issue may be junior-in-lien to another security issue.
C) the new barges might sink, and the collateral would be gone.
D) the company might demand that she accept common stock for her bond.
Answer: B) the issue may be junior-in-lien to another security issue