Which of the following statements is correct?
A)A secured bond has specific assets pledged as collateral to secure it.
B)An unsecured bond can be paid at the option of the issuer.
C)A bond trustee is appointed to represent the issuing company.
D)The bond indenture specifies the market rate of interest the investors will earn.

Question

Quizplus · Accepted Answer

A secured bond is backed by specific assets that are pledged as collateral to the bondholders. These assets are used as a guarantee in case the issuer defaults on the bond payments. Unsecured bonds, on the other hand, are not backed by collateral and are dependent on the issuer's ability to pay. The bond trustee represents the bondholders, and the bond indenture specifies the terms and conditions of the bond, including the interest rate.

Which of the Following Statements Is Correct