When a Borrower Pledges Financial Assets as Collateral for a Bond

question 57

Multiple Choice

When a borrower pledges financial assets as collateral for a bond it is called a(n)

• A) Mortgage bond.
• B) Equipment trust certificate.
• C) Mortgage pass-through security.
• D) Collateral trust bond.
• E) Collateralized mortgage obligation (CMO).

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Definitions:

Promissory Estoppel

The legal enforcement of an otherwise unenforceable contract due to a party’s detrimental reliance on the contract.

Negligent Misrepresentation

A false statement of material fact made by a party who thinks it is true but who would have known the truth about the fact had he or she used reasonable care to discover or reveal it.

Statute of Frauds

A legal doctrine requiring certain contracts to be in writing and signed by the parties involved to be enforceable.

Lifetime Employment

A practice, often associated with Japanese companies, where employees are hired with an understanding or expectation of employment security until retirement.