An asset-backed bond will have the greatest need of strong bond covenants if it is to receive a high bond rating.

Question

Quizplus · Accepted Answer

Asset-backed bonds are secured by collateral, which reduces the risk for investors. Therefore, they may not require as strong covenants as other types of bonds. However, the final decision on bond rating and covenant strength ultimately depends on several factors, including the quality of the underlying assets, the level of subordination and protections for investors, and the overall credit quality of the issuer.

An Asset-Backed Bond Will Have the Greatest Need of Strong