Subordinated Notes are characterized by which of the following features?

Subordinated Notes are indeed characterized by having higher interest rates than Senior Notes. This is primarily due to their position in the capital structure; if a company faces financial difficulties or goes bankrupt, subordinated debt is repaid after senior debt is settled. As a result, investors in subordinated notes take on more risk, and to compensate for this, the issuer typically offers a higher yield compared to senior debt instruments.

This higher risk arises because subordinated noteholders have a lower priority for repayment in the event of liquidation, meaning they might not receive full repayment if the company's assets are insufficient to cover its senior obligations. Therefore, investors demand a higher return for taking on this additional risk, leading to the characteristic of higher interest rates.

In contrast, the other options do not accurately reflect the nature of subordinated notes. Maintenance covenants are not universally applied to these instruments, and while some may have shorter durations, it's not a defining feature of all subordinated notes. Additionally, categorizing subordinated notes as the safest form of debt contradicts their inherent risk profile as subordinate in the repayment hierarchy.