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CAPITAL MARKETS (TYPES OF BONDS (GENERAL OBLIGATION BONDS (Do not have…

- - - - Are used to finance a specific project. For example, a building may be the collateral for bonds issued for its construction.
    - - Are bonds secured by tangible non-real-estate property, such as heavy equipment or airplanes. Typically, the collateral backing these bonds is more easily marketed than the real property backing mortgage bonds.
  - - - The interest rate on these securities is tied to another market interest rate, such as the rate on Treasury bonds, and is adjusted periodically. The interest rate on the bonds will change over time as market rates change.
    - - However, when companies ran into financial difficulties, their bond ratings would fall. Holders of these downgraded bonds found that they were difficult to sell because no well-developed secondary market existed.
    - - Are long-term unsecured bonds that are backed only by the general creditworthiness of the issuer.