The protection of bond collateral

Question

Quizplus · Accepted Answer

Protecting bond collateral is crucial to increasing the safety of the bond issue, as it provides investors with assurance that there are assets backing the bond in case it defaults. This, in turn, can enhance the marketability of the bond issue, as investors are more likely to invest in a bond that is perceived as safe. Therefore, option D - "both (a) and (b)" is the correct answer. Option C - "does not usually occur in a bond issue" is incorrect, as collateral is often used to secure bonds.

The Protection of Bond Collateral