[amp_mcq option1=”Mortgaged debentures” option2=”Simple debentures” option3=”Bearer debentures” option4=”Registered debentures” correct=”option2″]
The correct answer is: B. Simple debentures.
Unsecured debentures are also called simple debentures because they are not secured by any specific asset of the company. This means that in the event of a default, the debenture holders have no recourse to any specific asset of the company. Instead, they are only entitled to a share in the general assets of the company.
Mortgaged debentures are secured by a specific asset of the company. This means that in the event of a default, the debenture holders can seize the asset and sell it to recover their investment.
Bearer debentures are not registered in the name of the owner. This means that the ownership of the debentures is transferred by physical delivery of the debenture certificate.
Registered debentures are registered in the name of the owner. This means that the ownership of the debentures is transferred by a change in the register of debenture holders.