Final answer:
A secured bond is backed by company assets and offers additional security to bondholders because the assets can be sold to repay the loan if the issuer defaults.The right answer is option 4
Step-by-step explanation:
The instrument that is backed by company assets, which will be presented to bond owners if borrowed loans are not repaid, is known as a secured bond. This type of bond provides additional security for the bondholder because if the issuer defaults on the loan, the assets backing the bond can be seized and sold to fulfill the issuer's obligations to the bondholders. In contrast, debentures are not backed by specific assets, so they carry a higher risk and therefore usually offer a higher interest rate to compensate. Furthermore, convertible bonds are a type of bond that can be converted into a pre-determined amount of the company's equity at certain times during its life, usually at the discretion of the bondholder.