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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.
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.
3.
Mortgage bonds are backed by _______.
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Real estate. That is why they are called mortgage bonds.
4.
Unsecured bonds are issued with the issuer's promise to offer stock options in the future.
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False. The sellers do not offer stock options to investors at a later date when issuing unsecured bonds.
5.
Municipal bonds that are not backed by collateral are called _______.
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General obligation bonds. Their collateralized counterparts are called revenue bonds.