Asked by Manuel Mollinedo on Apr 29, 2024
Verified
Unsecured bonds are called
A) junk bonds.
B) debentures.
C) indentures.
D) subordinated debentures.
E) either debentures or subordinated debentures.
Subordinated Debentures
A type of debt instrument that ranks below other debts in case of liquidation or bankruptcy.
Debentures
A type of debt instrument that is not secured by physical assets or collateral but is based on the issuer's creditworthiness and reputation.
Junk Bonds
High-yield bonds with a lower credit rating than investment-grade bonds, reflecting a higher risk of default.
- Ascertain and differentiate various bond types by their security, objective, and features.
Verified Answer
MS
Mah Sanah BaharMay 01, 2024
Final Answer :
E
Explanation :
Unsecured bonds are referred to as debentures or subordinated debentures. Debentures are a type of bond not secured by physical assets or collateral, and subordinated debentures are a specific type of debenture that is lower in repayment priority than other debts in the event of the issuer's bankruptcy.
Learning Objectives
- Ascertain and differentiate various bond types by their security, objective, and features.
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