Financial Risk Manager Part 1

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Explanation:

Correct answer: A

A corporate debenture is an unsecured bond, meaning it is not backed by a specific pledge of designated property.

A is true: that is the standard definition of a debenture.
B is false: debenture holders do have a general claim on the issuer's assets and earnings, just not a claim secured by specific collateral.
C is false: many corporate bonds are debentures.
D is false: debentures may still contain protective covenants and provisions designed to protect bondholders.

Explanation:

Correct answer: A

A corporate debenture is an unsecured bond, meaning it is not backed by a specific pledge of designated property.

A is true: that is the standard definition of a debenture.
B is false: debenture holders do have a general claim on the issuer's assets and earnings, just not a claim secured by specific collateral.
C is false: many corporate bonds are debentures.
D is false: debentures may still contain protective covenants and provisions designed to protect bondholders.

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MManit

Last updated: April 18, 2026 at 11:32

a) Debentures are unsecured bonds; i.e., they are not secured by a specific pledge of designated property

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b) Debenture bondholders have no claim(s) on the property of the issuer (or its earnings)

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c) Very few (“almost none”) corporate bonds are debentures

d) Debentures are bonds that lack provisions designed to afford protection to bondholders