11.2 Characteristics Secured lender has specific claims over assets of borrower. Unsecured no specific claim Marketable can be traded in secondary market. Non-marketable Marketability refers to how easily the debt can be traded. Lenders have lower required return than shareholders because they bear less risk.
Subordinated debt ranks below other debt, so has a higher cost than unsubordinated debt.
Effect of debt on risk Financial risk arises because of the use of debt. From financial institutions Were referred to as fully drawn advances or term loans. Now the distinction is made between variable rate loans and fixed rate term loans. Mortgage loans property as security. Generally unsecured, variable rate.