Joann just purchased a Mortgage Bond, which is a type of bond that is backed by a specific piece of equipment or property owned by a corporation. This type of bond is also known as a secured bond, as it is secured by an asset that the issuing company owns.
The issuer of the bond agrees to use the asset as collateral to guarantee repayment of the bond’s principal and interest. Mortgage bonds are generally issued in order to raise money for a large purchase, such as the purchase of a piece of equipment, real estate, or other assets. The bond issuer agrees to repay the bondholders their principal and interest at a predetermined rate, usually over a set period of time. The principal and interest payments are usually secured by the asset backing the bond.
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