When a company issues a long-term debt instrument with no security attached it is selling _____ to investors.
A) shares
B) debentures
C) unsecured notes
D) term loans

Question

Quizplus · Accepted Answer

Unsecured notes are long-term debt instruments issued without any form of collateral or security. They are considered riskier than secured debt instruments such as mortgage bonds, as the lender has no recourse to recover their investment if the borrower defaults on the debt.

B and D are not accurate, as debentures and term loans can be secured or unsecured, depending on the terms of the agreement. A is not accurate, as shares represent ownership in a company and are not a form of debt.

When a Company Issues a Long-Term Debt Instrument with No