Q335
Bonds that are usually unsecured and are only backed by worthiness of issuing firm are classified as
A.
untimed indentures
B.
untimed debentures
C.
indentures
D.
debentures
AnswerAnswer: Option D
Solution
Answer: Option D
Solution:
Bonds that are usually unsecured and are only backed by worthiness of issuing firm are classified as debentures. Debentures are a debt instrument used by companies and government to issue the loan. The loan is issued to corporates based on their reputation at a fixed rate of interest. Debentures are also known as a bond which serves as an IOU between issuers and purchaser.