Which of the following types of bonds are usually unsecured debts maturing in 20-40 years and paying semi-annual interest?
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A. B. C. D.D
The correct answer is D. Corporate bonds.
Corporate bonds are issued by companies to raise capital for various purposes such as expansion, research and development, and debt refinancing. They are usually long-term debt securities, with maturities ranging from 10 to 40 years, and pay semi-annual interest to bondholders.
Corporate bonds may be either secured or unsecured, with secured bonds having some form of collateral backing the bond issue, while unsecured bonds have no such backing. Unsecured bonds are also known as debentures and are usually issued by companies with high credit ratings.
Municipal bonds, on the other hand, are issued by state and local governments to finance public projects such as schools, highways, and hospitals. They are usually tax-exempt and may have maturities ranging from one to 30 years.
Convertible bonds are hybrid securities that can be converted into a predetermined number of common stock shares at a later date. They usually have a lower coupon rate compared to non-convertible bonds and are therefore more attractive to investors who expect the company's stock price to rise.
Zero coupon bonds are bonds that do not pay interest during their term and are issued at a discount to their face value. They are also known as discount bonds and are redeemed at their face value upon maturity.
In summary, the type of bonds that are usually unsecured debts maturing in 20-40 years and paying semi-annual interest are corporate bonds.