Help
Course Catalog > Bonds > 100
Bonds 106: The Role of Collateral

Test your knowledge

Choose wisely. There is only one correct answer to each question.

0%
Keep studying!
Review your answers below to learn more.
1.
A collateralized security has a lower default risk than one without collateral.
Choose wisely. There is only one correct answer.
True. Collateral ensures that some kind of payment will be made to the bondholder.
2.
Securities with collateral are more attractive in the secondary market than they would be without collateral.
Choose wisely. There is only one correct answer.
True. Collateralized securities are perceived by many investors as safer investments.
3.
The less risk an investment has, the more an investor expects to earn from it.
Choose wisely. There is only one correct answer.
False. The more risk an investment has, the more an investor expects to be able to earn from it.
4.
Which investment pledges a portfolio of securities as collateral?
Choose wisely. There is only one correct answer.
Repurchase agreement. Repurchase agreements use portfolios of securities as their collateral.
5.
Loan and debt issuers use collateral to attract investors.
Choose wisely. There is only one correct answer.
True. Collateral helps protect against losses from default.