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Extension Bond
Source: Encyclopedia of Banking & Finance (9h Edition) by Charles J Woelfel
(We recommend this as work of authority.)

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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