Other things equal, a firm will have to pay a higher coupon rate on its subordinated debentures than on its second mortgage bond

Question

Marizza181 [45]

2 years ago

11

Other things equal, a firm will have to pay a higher coupon rate on its subordinated debentures than on its second mortgage bond

s. true false

Business

1 answer:

spin [16.1K] · Answer 1 · 2024-01-18T22:13:34+03:00

The statement "Other things equal, a firm will have to pay a higher coupon rate on its subordinated debentures than on its second mortgage bonds." is True

This is further explained below.

<h3>What is a Mortgage?</h3>

Generally, MBS stands for mortgage-backed securities, which are bonds that are backed by mortgages and other types of real estate loans.

They are produced when a number of these loans, which often have qualities that are comparable to one another, are pooled together.

A company that operates for the purpose of making a profit and is often structured as a partnership in order to carry out the provision of professional services, such as legal or accounting work, is referred to as a firm.

The maximization of profits is the overarching goal of the business, according to the theory of the firm.

In conclusion, It is correct to say that, "all things being equal, a company will be required to pay a greater coupon rate on its subordinated debentures than on its second mortgage bonds."