Sarah Peterson has been thinking about investing in corporate bonds.She is concerned about safety and wants the most secure bond investment possible.She would most likely invest in ____________ bonds.

Question

Quizplus · Accepted Answer

Mortgage bonds are secured by real estate, making them the most secure type of corporate bond. The property serves as collateral, which ensures that bondholders receive their principal and interest payments even if the issuer defaults. Debenture bonds, on the other hand, are unsecured and backed only by the issuer's reputation and creditworthiness. Subordinated and convertible bonds carry higher risk than mortgage bonds, as they have lower priority than other types of debt in the event of default. Finally, an indenture is a legal agreement that outlines the terms and conditions of a bond issue, rather than a type of bond itself.

Sarah Peterson Has Been Thinking About Investing in Corporate Bonds