Question

State to whether the following statements are True/False.

Unsecured debentures are safer than secured debentures.

Answer 1

False

Explanation: Unsecured debentures are issued without any security or charge, whereas secured debentures are issued with security or charge (floating or fixed) on the assets of a company. Therefore, secured debentures are more secure because if a company defaults in paying interest, the debenture-holders may sell off the assets in order to recover their dues.