Which of the following forms of debt would be likely to offer debt holders the lowest interest rate?
A)secured debt that is not callable.
B)secured debt with a sinking fund.
C)subordinated debt that is callable.
D)subordinated debt with a sinking fund.

Question

Quizplus · Accepted Answer

Secured debt with a sinking fund offers lower risk to debt holders, since the sinking fund provides a source of funds to pay off the debt in case of default. This lower risk translates into a lower interest rate for the debt.

Which of the Following Forms of Debt Would Be Likely