You own A T & T bonds. What is your relationship to A T & T? You want to check t

Question

You own A T & T bonds. What is your relationship to A T & T? You want to check the original agreement to see when interest payments are made What is this agreement called? Assuming you paid the usual face value for your bonds, what did you likely pay for them? You are comparing several bond investments. IBM has mortgage bonds, A T & T has debenture bonds, and Microsoft has subordinated debentures. Which of these would likely pay the highest interest? Why? All things being equal, which of these is the least risky?

Explanation / Answer

a.) Since i hold AT&T bonds, I am investor for AT&T.

b.) Debt Agreement containing the terms is called as Indenture.

c.) Assuming the face value was paid, the amount likely paid is $1000/bond.

d.) A mortgage bond is backed by a mortgage collateral as compared to debenture bond. This is why it is considered to be safer than debenture bond because the investors can recover their money by selling off the assets. Subordinated debentures are junior bonds which are usually unsecured and carry higher amount of risk. In the event of default, all other bondholders will be paid before this bond holders. Since, subordinated debentures carry highest risk, they should pay the highest interest.

e.) Least Risky is the mortgage bonds issued by IBM.

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