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Bonds 107: Secured and Unsecured Bonds

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1.
The collateral behind a railroad car purchase may be the railroad car itself.
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True. Railroads commonly sell equipment trust certificates to buy new equipment. Sometimes, the collateral is the item that was bought.
2.
What is a debenture?
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A bond without collateral behind it. Some pay high yields, and many are sold by corporations, but all of them lack collateral.
3.
Mortgage bonds are backed by _______.
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Real estate. That is why they are called mortgage bonds.
4.
Which unsecured bond can be exchanged for stock?
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Convertible bond. This bond has no collateral backing it.
5.
What secures revenue bonds?
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Revenue generated by projects funded by the bonds. This revenue is used to pay interest and principal to investors.