When might a mortgage bond be less secure that a debenture?
A) The mortgage bond is issued by a highly leverage, unprofitable company.
B) The debenture is issued by a start-up company.
C) The mortgage bond is backed by a specific asset such as a certain piece of machinery.
D) The debenture is callable and the mortgage bond is not.

Question

Quizplus · Accepted Answer

A highly leveraged, unprofitable company may have a lower ability to repay its debts, making the mortgage bond less secure compared to a debenture.

When Might a Mortgage Bond Be Less Secure That a Debenture