A bond secured by specific assets set aside to redeem the bonds is called a
A) convertible bond.
B) sinking fund bond.
C) mortgage bond.
D) secured bond.

Question

Quizplus · Accepted Answer

A sinking fund bond is secured by specific assets that are set aside to redeem the bonds. The sinking fund is typically managed by a trustee who ensures that the required payments are made to the bondholders. This makes the bond less risky compared to unsecured bonds since there is a specific pool of funds available to pay off bondholders. Option A is incorrect since a convertible bond is a type of bond that can be converted into equity shares. Option C is incorrect since a mortgage bond is secured by real property. Option D is too broad since any bond that has collateral can be considered a secured bond.

A Bond Secured by Specific Assets Set Aside to Redeem