Which One of the Following Bonds Is Considered Unsecured

question 108

Multiple Choice

Which one of the following bonds is considered unsecured?

• A)$50,000, 8%, debenture bonds
• B)$100,000, 12%, restricted bonds
• C)$20,000, 10%, five-year callable bonds
• D)$40,000, 6%, collateralized bonds

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Definitions:

Due Diligence

The investigation or exercise of care that a reasonable business or person is expected to take before entering into an agreement or transaction with another party.

Covenant Waivers

Agreements that allow a borrower to avoid being in default on their loan covenants, often granted by a lender under certain conditions.

Indenture Evaluation

The process of assessing the terms and conditions of a bond agreement, known as an indenture.

Free Cash Flows

The amount of cash a company generates after accounting for capital expenditures needed to maintain or expand its asset base.