Convertible bonds generally have lower coupon rates than non-convertible bonds of similar default risk becau

Essentials Of Investments
11th Edition
ISBN:9781260013924
Author:Bodie, Zvi, Kane, Alex, MARCUS, Alan J.
Publisher:Bodie, Zvi, Kane, Alex, MARCUS, Alan J.
Chapter1: Investments: Background And Issues
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Which of the following statements is CORRECT?
  a. Convertible bonds generally have lower coupon rates than non-convertible bonds of similar default risk because they offer the possibility of capital gains.  
  b. A debenture is a secured bond that is backed by some or all of the firm's fixed assets.  
  c. Junk bonds typically provide a lower yield to maturity than investment-grade bonds.  
  d. A company's subordinated debt has less default risk than its senior debt.  
  e. Senior debt is debt that has been more recently issued, and in bankruptcy it is paid off after junior debt because the junior debt was issued first.
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