Which type of bond is based on the full faith and credit of the company?

The type of bond that is based on the full faith and credit of the company is a debenture. Debentures are unsecured loan certificates issued by a company to raise capital. They are backed only by the creditworthiness and reputation of the issuing company, meaning that holders rely on the company's financial stability to ensure repayment of the principal along with interest.

This distinction is important because companies are not required to provide specific collateral for debentures, unlike secured bonds, which are backed by specific assets. Investors who purchase debentures typically assess the company's financial statements, credit ratings, and overall market conditions to determine whether the potential return justifies the risk associated with lending to the issuer.

The other options do not represent the same type of investment: common stock represents ownership in a company rather than a debt obligation, convertible bonds can be converted to stock but still may carry different risk profiles, and zero coupon bonds do not pay periodic interest but are sold at a discount and redeemed at face value at maturity. Each of these alternatives comes with its own set of risks and characteristics that differ fundamentally from those of a debenture.