Q248
Debentures that are considered as junior bonds as compared to debentures and mortgage bonds are classified as
A.
subordinated debentures
AnswerB.
ordinate debentures
C.
expansion debentures
D.
premium debentures
Answer: Option A
Solution
Answer: Option A
Solution:
Debentures that are considered as junior bonds as compared to debentures and mortgage bonds are classified as subordinated debentures. Subordinated debenture is a bond classified lower than more senior debt in the event of a default. This means that the holders of more senior securities are paid first, before any residual funds are made available to the holder of the subordinated debenture.