Which of the Following Bond Types Has the Greatest Risk

question 14

Multiple Choice

Which of the following bond types has the greatest risk for investors?

• A) debentures
• B) mortgage bonds
• C) floating rate bonds
• D) subordinated debentures

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Definitions:

Unauthorized Acts

Actions taken without the necessary permission or authority, often violating agreements or laws.

Principal

The main party to a transaction or contract who has authorized another (an agent) to act on their behalf, or the primary sum of money owed on a loan, excluding interest.

Third Party

An individual or entity that is not a direct participant or primary party involved in a transaction or legal matter.

Legal Capacity

The ability of an individual to understand and appreciate the consequences of their actions for the purpose of entering legally binding contracts or making other legal decisions.