- CFA Exams
- CFA Level I Exam
- Topic 6. Fixed Income
- Learning Module 1. Fixed-Income Instrument Features
- Subject 2. Bond Indenture
CFA Practice Question
Subordinated debentures ______
B. possess a claim on the issuer that is subordinated to other debentures.
C. are a type of senior bond.
D. possess a claim on the issuer that is above that of other debentures.
E. are also known as minor debentures.
A. are also known as senior debentures.
B. possess a claim on the issuer that is subordinated to other debentures.
C. are a type of senior bond.
D. possess a claim on the issuer that is above that of other debentures.
E. are also known as minor debentures.
Correct Answer: B
Subordinated (junior) debentures hold a claim on the income and assets of the issuer that is subordinated to that of other debentures. As such, they are not quite as secure for the bondholder as are other debentures.
User Contributed Comments 2
| User | Comment |
|---|---|
| johntan1979 | No such thing as a minor debenture. |
| Antoinepo | thanks john |