In regards to Liquidation priority, one practice test question says this…
Wages and Taxes
Secured Creditors (Bondholders)
But in the reading material it also says this…
Junior unsecured creditors
I understand Debentures are “Unsecured Creditors.” Does this mean that Junior Unsecured Creditors are also “ Subordinated Debentures” ?
My other question is about SIPC insurance. I’m just not connecting with the math on these questions.
Here is the question one of the practice exams:
“Question: In the event of broker-dealers failure, SIPC insurance can be utilized. How much coverage does a customer receive if they have an account with 675,000 of securities and 255,000 of cash?
Answer: 250K in Cash and 250K in securities.”
I understand that SIPC coverage is up to 500K, and no more than 250K towards cash priority first. But why the 250K towards securities? How does it come to that amount?