Which of the following statements is (are) correct about long-term loans?
I. Debentures are generally sold with a lower interest rate than mortgage bonds or secured bonds.
II. The quality of a debenture depends on the general creditworthiness of the issuing company.
A) Only statement I is correct.
B) Only statement II is correct.
C) Both statements I and II are correct.
D) Neither statement I nor II is correct.

Question

Which of the following statements is (are) correct about long-term loans?
 I. Debentures are generally sold with a lower interest rate than mortgage bonds or secured bonds.
II. The quality of a debenture depends on the general creditworthiness of the issuing company.
A) Only statement I is correct.
B) Only statement II is correct.
C) Both statements I and II are correct.
D) Neither statement I nor II is correct.

Quizplus · Accepted Answer

The quality of a debenture indeed depends on the general creditworthiness of the issuing company, as debentures are unsecured loans that do not have specific assets pledged as collateral. Statement I is incorrect because debentures typically carry a higher interest rate than secured bonds like mortgage bonds, reflecting the higher risk associated with the lack of collateral.

Which of the Following Statements Is (Are) Correct About Long-Term