SIE (Securities Industry Essentials) Practice Exam 2025 - Free SIE Practice Questions and Study Guide

The corporate debt security described in the scenario, where Nationwide wrote an unsecured promise to pay the principal of its loan without any pledge of property, is best characterized as a debenture. A debenture is a type of debt instrument that is not backed by physical assets or collateral, meaning that it relies primarily on the creditworthiness and reputation of the issuer for payment.

Debentures typically have a longer maturity than other types of corporate debt and often come with a fixed interest rate. Given that there is no collateral backing this promise, it highlights the essence of a debenture as a riskier investment compared to secured bonds, which are tied to specific assets.

In contrast, bonds generally involve secured debt backed by specific assets of the issuer, while notes typically refer to short-term debt instruments. Certificates of deposit, on the other hand, are time deposits offered by banks and are not related to corporate debt securities. This context reinforces why the designation of debenture is the most appropriate in this scenario.