106 Introduction to The Role of Collateral
The presence of collateral can mean many things to bond investors. We will look at that in this tutorial.
What you will learn
- Collateral
- Collateral Used to Secure Bonds
- Collateral Reduces Default Risk
- Collateralized Securities May Offer Lower Rates
What do you know?
Introduction to The Role of Collateral
When you buy a bond or other debt security, it is important to consider whether it has collateral behind it. Many bonds do, but many do not. Collateral plays a role in the value and desirability of a bond. You can choose to buy a bond based on whether it has collateral and, if so, what kind of collateral it has.
