A financial advisor is evaluating the credit backing and liquidation priority of several corporate and municipal debt obligations for a client portfolio. Which of the following statements accurately describes the structural security backing of these debt securities?
- Equipment trust certificates are secured debt obligations backed by specific physical assets, giving holders a claim senior to debenture holders upon corporate liquidation.Cevap
- BSubordinated debentures hold a prior claim over secured mortgage bonds because debentures are backed by the full faith and credit of the corporation.
- CMunicipal revenue bonds are secured by the full taxing power of the issuing municipality, whereas general obligation (GO) bonds rely exclusively on project facility fees.
- DIndustrial development bonds (IDBs) are backed by the full faith and credit of the municipal issuer rather than the corporate lease payments of the commercial user.
Cevap
Equipment trust certificates are secured debt obligations backed by specific physical assets, giving holders a claim senior to debenture holders upon corporate liquidation.
Equipment trust certificates are secured corporate bonds backed by title to specific physical property (such as aircraft, rolling stock, or fleet vehicles). In corporate bankruptcy and liquidation, secured debt claims take priority over unsecured obligations such as debentures and subordinated debentures.
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Anahtar Kavram
Corporate Liquidation Hierarchy and Bond Security Backing Structures