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Which of the following definitions describes a secured bond? Multiple Choice Secured only by the "full...

Which of the following definitions describes a secured bond?

Multiple Choice

  • Secured only by the "full faith and credit" of the issuing corporation.

  • Supported by specific assets pledged as collateral by the issuer.

  • Matures in installments.

  • Matures on a single date.

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Answer #1

Answer: Option b.Supported by specific assets pledged as collateral by the issuer.

Name itself gives a hint that "Secured". The investor money is secured with company by pledge of asset.

Thus, Supported by specific assets pledged as collateral by the issuer this definitions describes a secured bond.

Secured only by the "full faith and credit" of the issuing corporation it is a just verbal security. Security should be measured in monetary terms.

Secured bond can mature at installments or at single date as per the clause of the company.

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