10. More on types of bonds A legal document that details the rights of bondholders and the issuer is called If the legal document just described includes a sinking fund provision, is the bond considered to have more or less default risk, all else being equal? Less default risk More default risk You can distinguish the various types of bonds by their terms of contract, pledge of collateral, and so on. Identify the type of bond based on each description given in the table that follows: Type of Bond Description These bonds are backed by real estate holdings and equipment, and if a company goes bankrupt, the collateral can be sold off to compensate for the default. These bonds, more so than other collateralized securities, have prior claims over assets. These bonds are traded in the bond markets based on investors' belief that the issuer will not default on the repayment. These bonds have no collateral and usually offer higher yields. These bonds have a claim on assets only after senior debt has been paid in full. The California Pollution Control Financing Authority (CPCFA) has a pollution control tax-exempt financing program. This program allows California businesses to get financing for the acquisition, construction, rehabilitation, and equipping of their facilities for pollution control, waste disposal, waste recovery, and other activities conducted in the public's interest. Such bonds are called development or pollution control bonds. Development bonds have interest rates as corporate bonds. Based on your understanding of bond ratings and bond-rating criteria, which of the following statements is true? BBB bonds usually have the lowest yields the bond markets. O U.S. government bonds usually have the lowest yields in the bond markets