SECURED BOND Meaning and
Definition
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A secured bond refers to a type of fixed-income investment instrument that provides bondholders with a form of collateral to protect their investment. In this context, the term "secured" indicates the presence of an underlying asset that acts as security or collateral for the bond. This asset can be physical property, equipment, or any other valuable asset that can be sold or liquidated to repay bondholders in case of default.
The prime feature of a secured bond is the reduced level of risk it presents to investors compared to unsecured or debenture bonds. As a result, secured bonds generally offer lower interest rates compared to their unsecured counterparts. The presence of the collateral provides bondholders with an added layer of assurance, allowing them to recoup at least a portion of their investment in the event of default.
The security or collateral associated with a secured bond is typically pledged by the issuer or the borrower to the bondholders. This arrangement assures investors that their interests are protected and increases the likelihood of receiving payments and interest as promised. The specific terms and conditions of a secured bond, including the nature and value of the collateral, are typically outlined in the bond agreement and prospectus.
Overall, the concept of a secured bond revolves around the notion of a pledged asset acting as a guarantee for the repayment of the bond's principal and interest in case of default. This added security helps mitigate risks and provides reassurance to potential bondholders, making secured bonds an attractive investment option for risk-averse individuals or institutional investors seeking stability in their fixed-income portfolio.
Common Misspellings for SECURED BOND
- aecured bond
- zecured bond
- xecured bond
- decured bond
- eecured bond
- wecured bond
- swcured bond
- sscured bond
- sdcured bond
- srcured bond
- s4cured bond
- s3cured bond
- sexured bond
- sevured bond
- sefured bond
- sedured bond
- secyred bond
- sechred bond
- secjred bond
Etymology of SECURED BOND
The etymology of the word "secured bond" can be understood by breaking down the term into its components:
1. Secured: The word "secured" is derived from the Old French word "secur", meaning "safe" or "securus" in Latin, which translates to "free from care". It is related to the Latin word "securitas" meaning "security". In the context of a bond, "secured" refers to a financial instrument that is backed by collateral or assets to ensure repayment to investors in case of default.
2. Bond: The word "bond" originated from the Old Norse language, where it was known as "böndi" meaning "peasant" or "dweller in the country". It later evolved to represent various meanings, including a binding agreement or a tie that unites people or things.
Similar spelling words for SECURED BOND
