Debentures Are Expected to Have a Lower Yield Than Secured

question 131

True/False

Debentures are expected to have a lower yield than secured bonds because the debentures are more risky and therefore less desirable.

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Definitions:

Long-Term Investments

Assets that a company intends to hold for more than one year, such as stocks, bonds, real estate, and other securities.

Accounting Period

A specific period of time used for financial reporting purposes, which could be monthly, quarterly, or annually.

Voting Common Stock

Shares of a company that grant the shareholder voting rights in corporate decisions, typically related to the election of the board of directors.

Equity Method

An accounting technique used by firms to assess the profits earned by their investments in other companies, where the investment is recorded at cost and adjusted for dividends received and the investor's share of the investee's profit or loss.