Suppose a company simultaneously sold two long term debt issues at par 918 percent senior debentures and 938 percent subordinated debentures What riskreturn tradeoff would be faced by an investor who was considering one of these issues ...

Investors would have a potential tradeoff between t ...

Suppose a company simultaneously sold two long-term debt issues at par: 918 percent senior debentures and 938

Question:

Suppose a company simultaneously sold two long-term debt issues at par: 91⁄8 percent senior and 93⁄8 percent subordinated . What risk–return tradeoff would be faced by an investor who was considering one of these issues?

Debentures
Debenture DefinitionDebentures are corporate loan instruments secured against the promise by the issuer to pay interest and principal. The holder of the debenture is promised to be paid a periodic interest and principal at the term. Companies who...