| Collateral Trust Bond | |
 A bond that is secured by a financial asset - such as stock or other bonds - that is deposited and held by a trustee for the holders of the bond. |
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 If the issuing company were to default on the debt obligation, the debt holders would receive the securities held in trust, like collateral for a loan. For example, say Company A issues a collateral trust bond, and as collateral for the bond it includes the right to Company A shares held by a trust company. If Company A were to default on the bond payments, the bondholders would be entitled to the shares held in trust. |
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 Bond Basics Tutorial - What are bonds and do they belong in your portfolio? Get all the answers in this comprehensive tutorial. |
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