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An unsecured bond, backed only by the well-respected name of the organization, is called a __________ bond.Multiple Choicedebenturemortgageconvertibleleveraged

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Solution

The correct answer is debenture.

A debenture is an unsecured bond that relies on the creditworthiness and reputation of the issuer rather than any specific assets or collateral. Investors in debentures are paid interest based on the company's financial performance, and they have no claim on specific assets in the event of bankruptcy. This makes it distinct from other types of bonds such as mortgage bonds, which are secured by specific property, or convertible bonds, which can be converted into company stock under certain conditions. Leveraged bonds, on the other hand, refer to bonds issued by companies that have considerable debt; they are not specifically characterized by being unsecured like debentures.

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