A second mortgage bond is one secured by second mortgage. Interest cannot be paid on second mortgage bonds until it has been paid on the first mortgage bonds.
General mortgage bonds are those secured by a general mortgage on all of the company's property.
Collateral bonds are secured by the deposit of collateral security.
A debenture is a bond with no other security than the good name of the company.
Refunding bonds are those issued in place of maturing bonds which the company does not wish to pay in cash.
Equipment bonds are those secured by the rolling stock of a railway, and are also known as car trust certificates.
A gold bond is any form of bond, the terms of which specify that it shall be paid in gold.
Registered bonds are those, the names of the owners of which must be registered on the books of the company. Ownership of a registered bond can be transferred only on the books of the company.
50. Bond Liability. When bonds are issued by a corporation, either public or private, an account is opened under some such caption as bond issue or bonds payable. As fast as bonds are sold the proceeds are credited to this account, which represents a liability. A new account should be opened for each issue of bonds.
The bonds of a given issue will all bear the same date, with interest payable from that date. We will suppose that a corporation issues its bonds for $100,000.00 in denominations of $1,000.00 each. These bonds are dated Feb. 1st, and bear interest at 5 per cent payable annually. They are payable at the end of 10 years from date. The company agrees to maintain a sinking fund of an amount sufficient to pay the bonds at maturity if invested in securities drawing 4 per cent interest, and to invest the fund in such securities which are to be placed in the hands of a trustee.