Because of the added security of collateral,the interest rates on _____bonds are usually lower than interest rates on unsecured bonds.
A)debenture
B)mortgage
C)indenture
D)preemptive
E)subordinated debenture

Question

Quizplus · Accepted Answer

Mortgage bonds are secured by the collateral of a specific piece of property, such as real estate. This added security reduces the risk for investors, which in turn results in lower interest rates compared to unsecured bonds such as debenture or subordinated debenture bonds. Indenture bonds refer to the legal agreement between the bond issuer and the bondholders and preemptive bonds refer to the right of existing shareholders to purchase additional shares before they are offered to the public.

Because of the Added Security of Collateral,the Interest Rates on _____Bonds