Question

In: Finance

if an investor is concerned about receiving timely payments of principal and interest, which of the...

if an investor is concerned about receiving timely payments of principal and interest, which of the following bonds is least suitable for the investor?

Collateral trusts

Equipment trusts

Adjustment bonds

Debentures

Solutions

Expert Solution

Correct answer is Option (C) Adjustment Bonds

These type of bonds are issued to restructuring the debt to cope with potential bankruptcy or Financial crisis experienced. There shall be a clause that the interest is paid when the corporation earns a positive figure. So, the repayment is not guaranteed.

On the other hand the first two options are secured and debenture also provides guaranteed payment of interest and principal normally. So, the least suitable option shall be Adjustment Bonds

jeff jeffy answered 2 years ago
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