b. More on types of bonds Aa Aa E 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? More default risk Less 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 not backed by any physical collateral. They are backed by the reputation and creditworthiness of the issuing company. These bonds have a claim on assets only after senior debt has been paid in full. These bonds are collateralized securities with first claims in the event of bankruptcy. 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. interest Such bonds are called development or pollution control bonds. Development bonds have rates as corporate bonds. Based on your understanding of bond ratings and bond-rating criteria, which of the following statements is true? During an economic recession and in a pessimistic environment, the yield spread between U.S. government bonds and corporate bonds will be higher than during good economic times. During a period of economic growth and in an optimistic environment, the yield spread between U.S. government bonds and corporate bonds will be higher than during an economic recession and a pessimistic environment