Bonds issued by a corporation, the control or ownership of which passes into the hands of another corporation, which latter agrees to be responsible for the payment both of the principal and interest of such bonds, are spoken of as " assumed bonds; " that is, the " parent company ' assumes the indebtedness. In railroad finance such securities are spoken of as " divisional issues," which is really what they are. Again, they are frequently referred to as " guaranteed bonds," but in the latter case the fact of the guarantee appears upon the bonds themselves.

Unless a payment of an issue of an absorbed company has been actually assumed by the " parent company," the investor can only look to the value of the property actually mortgaged as security for its investment, although the principal and interest on such issues might be protected by the larger company for the benefit of its own credit. Where the bonds have been actually assumed, then the " parent company " may be looked to for the final payment, although even in such a case it is not advisable to purchase securities of a branch or division which is not of sufficient importance to the controlling company to make it worth while to maintain the same and keep it in good physical condition.

" A " Stock (or Shares). See " Preferred Stock."