____________________ 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.

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Definitions:

Promissory Note

A financial tool comprising a formal pledge by one entity to compensate another entity with a certain amount of money, which can be requested at any time or on a predefined future date.

Negotiate

To discuss something in an attempt to reach agreement, especially in business or political contexts.

Properly Drawn

A term indicating that a document, especially a legal document, has been prepared correctly and in accordance with all necessary formalities.

Endorsee

A person or entity to whom a negotiable instrument, such as a cheque or promissory note, is legally transferred through endorsement.