How can bonds be transferred?

Bonds can be transferred by being issued to order and then transferred through a process known as endorsement. This means that the holder of the bond can sign the bond or an attached assignment form, allowing the bond to be transferred to another party. This method ensures that ownership is clearly documented and can be substantiated by the endorsement, which is a critical aspect of maintaining the integrity of financial transactions involving bonds.

The process of endorsement allows for a smooth and legal transfer of ownership, ensuring that the new holder can realize the benefits associated with the bond, such as interest payments and the return of the principal upon maturity. The ability to endorse and transfer bonds is a fundamental characteristic of many financial instruments, providing liquidity in the bond market.

In contrast, the other options present incorrect methods or restrictions for bond transfer. For instance, selling bonds through an auction process reflects a different method of bond issuance rather than transfer. The idea that bonds can be gifted without formalities overlooks the legal requirements often associated with the transfer of ownership of bonded financial instruments. Lastly, the statement that bonds cannot be transferred once issued is fundamentally inaccurate, as the capacity to transfer ownership is a key aspect of bond functionality.