Loading...
UPSC 2025: 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?
(a)Both Statement II and Statement III are correct and both of them explain Statement I
(b)Both Statement II and Statement III are correct and only one of them explains Statement I
(c)Only one of the Statements II and III is correct and that explains Statement I
(d)Neither Statement II nor Statement III is correct
Attempt This Question
Not attemptedCorrect Answer: (a) Both Statement II and Statement III are correct and both of them explain Statement I
Bondholders are creditors (lenders) of the company whereas stockholders are residual owners; in liquidation debt must be repaid before any distribution to equity. These two facts (Statements II and III) directly explain why bondholders face lower risk than stockholders (Statement I). Both statements are correct and both explain I. ([en.wikipedia.org](https://en.wikipedia.org/wiki/Bond_%28finance%29?utm_source=openai))
Related Current Affairs
Related UPSC Questions
More from Financial Markets & Capital Markets
2025easy
With reference to investments, consider the following: I. Bonds II. Hedge Funds III. Stocks IV. Venture Capital How many of the above are treated as A
2024easy
In India, which of the following can trade in Corporate Bonds and Government Securities? 1. Insurance Companies 2. Pension Funds 3. Retail Investors S
2024easy
Consider the following: 1. Exchange-Traded Funds (ETF) 2. Motor vehicles 3. Currency swap Which of the above is/are considered financial instruments?
Related Indian Economy Topics
2025Infrastructure & Industry
Consider the following statements: I. The Reserve Bank of India mandates all the listed companies in India to submit a Business Responsibility and Sus
2025Fiscal Policy & Budget
A country’s fiscal deficit stands at 50,000 crores. It is receiving 10,000 crores through non-debt creating capital receipts. The country’s interest l
Frequently Asked Questions
What is the correct answer to this UPSC 2025 Indian Economy question?▼
The correct answer is option (a): Both Statement II and Statement III are correct and both of them explain Statement I. Watch the detailed video explanation in our Sherlocking Prelims course on UnlockIAS.
Which year was this Financial Markets & Capital Markets question asked in UPSC Prelims?▼
This question was asked in UPSC CSE Prelims 2025, GS Paper 1, as Question 7. It falls under Indian Economy > Financial Markets & Capital Markets.
What is the difficulty level of this UPSC question?▼
This question is rated "easy". It tests basic recall and most well-prepared aspirants should answer it correctly.
How many UPSC Prelims questions have been asked from Financial Markets & Capital Markets?▼
UPSC has asked 39 questions from Financial Markets & Capital Markets (under Indian Economy) across multiple years. Visit the topic page to see the full list and year-wise trends.