Series 7 Exam Question 21: Answer and Explanation

Question: 21

Which of the following is TRUE regarding guaranteed bonds:

• A. They are backed by stocks and bonds owned by the issuing company
• B. They are mainly issued by transportation companies
• C. They are backed by the assets of another company
• D. They are issued by a corporation in bankruptcy

Correct Answer: C

Explanation:

C. Guaranteed bonds are backed by the assets of another company. Guaranteed bonds are mainly backed by the assets of a parent company.