Future Business Leaders of America (FBLA) Securities and Investments Practice Test

Which of the following bonds do not exist in the original bearer form anymore?

1. Registered bonds

2. General obligation bonds

3. Bearer bonds

4. Revenue bonds

The correct answer is: Bearer bonds

Bearer bonds are a type of bond that is owned by whoever physically holds the bond certificate. They do not register ownership, which means that the investor can easily transfer them simply by handing them over to another person. However, due to the increased risk of theft, fraud, and tax evasion associated with bearer bonds, many countries have phased them out or restricted their issuance. In the United States, for example, bearer bonds were largely eliminated in the 1980s and are no longer issued by federal government agencies. Registered bonds, in contrast, have the owner's name recorded, allowing for the tracking of ownership and coupon payments. General obligation and revenue bonds are types of municipal bonds that are issued by authorities or municipalities, and they continue to exist in various forms, often in registered or book-entry formats. Thus, the correct answer highlights the discontinuation of bearer bonds in their original form due to regulatory changes aimed at enhancing security and transparency in financial markets.