Yield on subordinated bonds as compared to non-subordinated bonds is considered as

A. highly risky and higher yields

B. highly risky and lower yields

C. less risky and higher yields

D. less risky and lower yields

Answer: Option A

Solution(By Examveda Team)

Yield on subordinated bonds as compared to non-subordinated bonds is considered as highly risky and higher yields. Subordinated debentures are thus also known as junior securities. In the case of borrower default, creditors who own subordinated debt will not be paid out until after senior bondholders are paid in full.