Which of the following statements is correct?
A)Mortgage bonds and debentures do not differ because they are both debt.
B)In the event of bankruptcy, debenture holders get paid after the claims of preferred shareholders.
C)Mortgages are secured by claims on specific real assets while debentures are not.
D)Debentures are secured by claims on specific real assets while mortgages are not.

Question

Quizplus · Accepted Answer

Mortgages are secured by claims on specific real assets, typically a property or piece of real estate. Debentures, on the other hand, are unsecured debt and are not backed by any specific asset. Therefore, option C is the correct statement. Option A is incorrect because while both mortgage bonds and debentures are types of debt, they differ in terms of the assets used as collateral. Option B is incorrect because in the event of bankruptcy, debenture holders are typically paid before preferred shareholders. Option D is also incorrect for the same reason as option A.

Which of the Following Statements Is Correct