____________________ Bonds Reduce a Bondholder's Risk by Requiring the Issuer

question 37

Essay

____________________ bonds reduce a bondholder's risk by requiring the issuer to create a fund of assets set aside as specified amounts and dates to repay the bonds at maturity.

---

Definitions:

Preferred Stock

A class of ownership in a corporation that has a higher claim on assets and earnings than common stock, often receiving dividends before common shareholders.

Noncontrolling Interest

Represents the equity interest in a portion of a subsidiary's net assets that is not attributable directly or indirectly to the parent company.

Common Stock

A type of equity security that represents ownership in a corporation, with holders usually having a vote in corporate decisions but in the last in line during liquidation.

Preferred Stock

A class of ownership in a corporation that has a higher claim on its assets and earnings than common stock, often receiving dividends before common shareholders and having a fixed dividend rate.