What is a mortgage bond?

A mortgage bond is defined as a bond that is secured by real property, typically involving real estate assets. This type of bond provides investors with the assurance that their investment is backed by tangible assets, which can be liquidated in the event of default.

In the context of mortgage bonds, the issuer uses the proceeds from selling the bonds to finance real estate projects or mortgages. This collateralization with physical real estate gives mortgage bonds a level of security that appeals to investors, as they have a claim against the underlying property in case the issuer fails to meet its obligations.

The other options involve different types of financial instruments. For instance, bonds backed by government securities are secured by the government's promise to repay, while personal loans do not involve property as collateral and are generally unsecured. Stocks represent equity in a company rather than a debt obligation, which is fundamentally different from the nature of a mortgage bond. Therefore, the definition of a mortgage bond as secured by real property accurately reflects its unique characteristics within the broader category of financial instruments.