Question

1. Describe Secured Bond and Unsecured bond. What is the difference?
2. Describe Senior bond and Subordinated bond. What is the difference?
3. Describe Callable bond, Non-callable bond, and Puttable bond. What is the difference between the
4. Describe a bond with positive convenants and bond with negative convenants. What is the difference.
5. What is the effect coupon rate for Secured Bond and Unsecured bond.

6. What is the effect coupon rate for Senior bond and Subordinated bond.

7. What is the effect coupon rate for Callable bond, Non-callable bond, and Puttable bond.

8. What is the effect coupon rate for a bond with positive convenants and bond with negative

Convenants.

9. Does Collateral benefit bond issuers or bondholders? Why?

10. Does Seniority benefit bond issuers or bondholders? Why?

11. Does Call provision benefit bond issuers or bondholders? Why?

12. Does Covenants benefit bond issuers or bondholders? Why?

Answer 1

A secured bond is one that is securred by the issuer, predging a specific asset Crollateral) for the wan. In the event of a default, the bondholdesn's can recover any ducs by sale of this collateed. These are less. husky as compared to unsecured bonds and hence pay a lover rate of interest. An unsecured bond. is one that is not backed by any specific asset or collatoul. The only badung is the issuers promise to repay. Given this curcunstance they Offer a higher rate of return for the investor. They junior to secured bonds.