a general rule, a company's debentures have higher required interest rates than its mortgage bonds because mortgage bonds are backed by specific assets while debentures are unsecured.

Question

Quizplus · Accepted Answer

The statement is true because mortgage bonds are secured by specific assets, which reduces the risk for investors, while debentures are unsecured and therefore carry a higher risk, resulting in higher required interest rates.

A General Rule, a Company's Debentures Have Higher Required Interest