A mortgage bond is backed by:

• A. The issuer's mortgage on real property
• B. The revenue of a project
• C. The issuer's reserve fund
• D. The government's guarantee

Answer: (A)

Mortgage bonds are a form of secured debt where the issuer pledges real property as collateral. The bond is backed by the issuer’s mortgage on real property, so bondholders have a lien on that property. If the issuer defaults, the lenders can seek repayment from the proceeds of selling the mortgaged property. This distinguishes mortgage bonds from revenue bonds (backed by project revenues), reserve fund-backed obligations (backed by specific reserve funds), or bonds with a government guarantee.