SIE practice questionmediumCorporate Bonds — Secured Types
An equipment trust certificate is a type of corporate bond that is:
- ASecured by specific equipment such as railroad cars or aircraft✓ Correct answer
- BIssued at a discount like a zero-coupon bond
- CBacked by the full faith and credit of the U.S. government
- DUnsecured, backed by the company's general credit
Explanation
Why A — Secured by specific equipment such as railroad cars or aircraft
Equipment trust certificates are secured bonds backed by specific pieces of equipment (commonly transportation equipment like railroad cars, aircraft, or trucks). Because they are secured by tangible, mobile assets with resale value, they typically carry lower risk and lower yields than unsecured debentures from the same issuer.
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