Q558
An unsecured bond that provides no lien against property as security for bond obligation is classified as
A.
secured bond
B.
debenture
AnswerC.
obligation bond
D.
specific bond
Answer: Option B
Solution
Answer: Option B
Solution:
An unsecured bond that provides no lien against property as security for bond obligation is classified as debenture. A debenture is a type of debt instrument that is not secured by collateral and usually has a term greater than 10 years. Debentures are backed only by the creditworthiness and reputation of the issuer. Both corporations and governments frequently issue debentures to raise capital or funds.