Which type of corporate bond is owned by the holder of the physical bond?

Which type of corporate bond is owned by the holder of the physical bond?

• A. Bearer bonds
• B. Registered bonds
• C. Term bonds
• D. Serial bonds

Answer: (A)

Ownership is determined by how the bond is issued. Bearer bonds are unregistered and physically issued certificates; the holder of the physical bond is presumed to own it, and interest payments can be claimed by presenting the coupons or the certificate. That direct link between possession and ownership is why they’re described as being owned by the holder of the physical bond. Registered bonds, in contrast, have ownership recorded in the issuer’s records, and transfer of ownership requires updating those records rather than simply handing over the certificate. The term and serial bond descriptions refer to how the bond matures (single date for term, multiple installments for serial) and do not define how ownership is evidenced. So the phrase “owned by the holder of the physical bond” aligns with bearer bonds, which is the best fit. Bearer bonds are largely rare today because of regulatory and security concerns.

Ownership is determined by how the bond is issued. Bearer bonds are unregistered and physically issued certificates; the holder of the physical bond is presumed to own it, and interest payments can be claimed by presenting the coupons or the certificate. That direct link between possession and ownership is why they’re described as being owned by the holder of the physical bond.

Registered bonds, in contrast, have ownership recorded in the issuer’s records, and transfer of ownership requires updating those records rather than simply handing over the certificate. The term and serial bond descriptions refer to how the bond matures (single date for term, multiple installments for serial) and do not define how ownership is evidenced.

So the phrase “owned by the holder of the physical bond” aligns with bearer bonds, which is the best fit. Bearer bonds are largely rare today because of regulatory and security concerns.