Final answer:
XYZ Corporation has issued a secured bond, which is backed by collateral, such as a warehouse property, providing greater security to bondholders in case the company defaults on its payments.
Step-by-step explanation:
The bond issued by XYZ Corporation, with a warehouse property pledged as collateral, is known as a secured bond. This type of bond gives bondholders a claim on the pledged assets, such as the warehouse property, in the event that the company fails to make the necessary payments on the bonds. Such a setup provides an additional layer of security for bondholders, making secured bonds slightly less risky compared to unsecured ones.
Corporate bonds are financial contracts through which a borrower agrees to repay the borrowed amount. If the bond issuer fails in its payment obligations, bondholders can demand repayment through the sale of the pledged assets. The concept of securing assets to bonds is what differentiates secured bonds from unsecured or junk bonds, which do not have such collateral and thus carry higher risk.