SIE practice questioneasyCorporate Bonds — Secured vs Unsecured
A debenture is a type of corporate bond that is:
- ABacked only by the general creditworthiness of the issuer✓ Correct answer
- BGuaranteed by the U.S. government
- CSecured by equipment owned by the corporation
- DSecured by specific real estate property
Explanation
Why A — Backed only by the general creditworthiness of the issuer
A debenture is an unsecured corporate bond backed only by the issuer's general credit and reputation — no specific collateral. Mortgage bonds are secured by real estate (A). Equipment trust certificates are secured by equipment (B). Corporate bonds are never guaranteed by the U.S. government (D).
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