Rule 7 of 32 in this unit2.1.2
2.1.2 Debt Instruments
SIE outline 2.1.2
Debenture Means Unsecured
A general creditor's claim. On everything not already pledged. Plus whatever is left after secured claims. NOT a statement about credit quality.
The trick
Common trap: More security must mean more income. Correct: Secured bonds yield less than comparable unsecured bonds. Safety costs you coupon.
The method for this kind of question
- Section 2 is the heaviest block
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