Secured bonds:
A)Are also referred to as debentures.
B)Have specific assets of the issuing company pledged as collateral.
C)Are backed by the issuer's bank.
D)Are subordinated to those of other unsecured liabilities.
E)Are the same as sinking fund bonds.

Question

Quizplus · Accepted Answer

Secured bonds have specific assets of the issuing company pledged as collateral, making them less risky for investors as they have a means of recovering their investment if the company defaults on the bond. Debentures are unsecured bonds. They are not backed by collateral but rather the general creditworthiness and reputation of the issuer. Secured bonds are not backed by the issuer's bank and are typically senior to other unsecured liabilities. Sinking fund bonds require the issuer to set aside funds annually to retire the bond, which is not the same as having specific assets pledged as collateral.

Secured Bonds