McGines, Inc.
Sam McGines, CEO of McGines, Inc., decided that upon his retirement, he would elect his son Derrick to become the new CEO. Sam thought it would be a good idea to have Derrick shadow him at work to understand the roles and responsibilities of a CEO. Derrick shadowed his father for months in order to learn every aspect of the business. Sam knew that the best way for Derrick to learn was to actually perform some of the tasks he did on a daily basis, rather than simply describe them. The company generally focused on short-term financing, and Sam felt that it was important for Derrick to understand the different types of financing. Derrick learned about the type of bonds that the company usually offered to raise capital. These bonds allow the purchasers of the bond to keep them until maturity. Derrick also learned the process of obtaining bonds and the various types of long-term financing methods. Job shadowing was indeed a worthwhile experience for Derrick.
-Refer to McGines, Inc. At one point, Derrick was not sure about which type of bond was backed only by the reputation of the issuing corporation. Which of the following would you suggest?

Question

Quizplus · Accepted Answer

A debenture bond is a type of bond that is not backed by any specific collateral or security, but rather by the general creditworthiness and reputation of the issuing corporation. This means that if the corporation is unable to make payments on the bond, the bondholders may have limited options for recourse. Mortgage bonds are backed by specific assets such as real estate, while convertible and registered bonds have specific features that distinguish them from debenture bonds. Corporate bonds are a broad category that includes all types of bonds issued by corporations, including debenture bonds.

McGines, Inc. Sam McGines, CEO of McGines, Inc., Decided That Upon His