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Bonds 107: Secured and Unsecured Bonds

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1.
Municipal bonds that are not backed by collateral are called _______.
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General obligation bonds. Their collateralized counterparts are called revenue bonds.
2.
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.
3.
Which unsecured bond can be exchanged for stock?
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Convertible bond. This bond has no collateral backing it.
4.
Although unsecured bonds have no backing, they are protected from default by a promise to pay.
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True. This promise is called "full faith and credit," and many corporations and government units with good credit use it.
5.
Which bond's interest and principal can be repaid by the US government?
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Treasury bond. The US Treasury sells its own bonds.