What secures the payment of interest and principal on Southern California Gas's bonds?

The correct choice, which indicates that the payment of interest and principal on Southern California Gas's bonds is secured by property owned by the company, points to the nature of secured bonds. This type of bond is backed by specific assets, which could include physical properties, infrastructure, or other tangible resources that the company owns.

In the event of a default, bondholders have a claim on these assets, making them more secure compared to unsecured bonds, which do not have such backing. This arrangement provides an extra layer of safety for investors, as they can potentially recover their investment through the liquidation of the secured assets.

Other options, while they may have their own merits in different contexts, do not provide the same level of security for bondholders. Cash reserves may be useful for covering short-term obligations but do not represent a guarantee against repayment in case of insolvency. Government guarantees can apply to certain bonds but are not universally present for all municipal or corporate bonds. Lastly, stock equity holdings represent ownership in the company and are subject to market fluctuations, lacking the direct security that a property would provide for bond repayment.