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Question
State to whether the following statement is True/False.
Unsecured debentures are safer than secured debentures.
Options
True
False
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Solution
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.
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