Multiple Choice
A bond's time to ______ is the number of years until the face value is due to be repaid.
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11. Long Term Liabilities
Introduction to Bonds and Bond Characteristics
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A corporate bond secured by various assets of the issuing firm is called a:
A
Callable bond
B
Debenture
C
Convertible bond
D
Mortgage bond
Verified step by step guidance1
Understand the concept of a corporate bond: A corporate bond is a debt security issued by a corporation to raise capital. It represents a loan made by an investor to the corporation.
Learn about the types of corporate bonds: Callable bonds can be redeemed by the issuer before maturity, debentures are unsecured bonds, convertible bonds can be converted into equity, and mortgage bonds are secured by specific assets.
Focus on the definition of a mortgage bond: A mortgage bond is a type of corporate bond that is secured by various assets of the issuing firm, such as real estate or equipment. This security reduces the risk for investors.
Compare the options provided: Callable bonds, debentures, and convertible bonds do not involve being secured by assets. Only the mortgage bond matches the description of being secured by various assets.
Conclude that the correct answer is a mortgage bond, as it aligns with the definition provided in the problem.
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