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Extension Bond
Source:
Encyclopedia of Banking & Finance (9h Edition) by Charles J Woelfel
(We recommend this as work of authority and you can order
it here)
A bond similar to
a DIVISIONAL BOND, but the underlying mortgage of which does not necessarily
coincide with the divisions of the issuing organization.
Extension bonds usually are covered by railroad property which
is a continuation or extension of the existing system.
They are frequently secured not only by the extension property,
but also by a junior lien upon other portions of the property.
The strength of
extension bonds as an investment depends on whether the extended property
is a main line and essential to the handling of through traffic.
An
extension bond should not be confused with an EXTENDED BOND.
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