Asked by Oppong Bright on May 06, 2024
Verified
An income bond is a bond which:
A) Is defined as paying semi-annual, fixed rate payments.
B) Provides semi-annual income for a period of ten years or more.
C) Pays interest only if the issuer has sufficient income to do so.
D) Is convertible into shares of common stock but which will continue to provide annual income for a stated period of time.
E) Pays coupon payments forever but never repays the principal.
Income Bond
A type of debt security that only pays interest if the issuer has sufficient earnings.
Semi-annual
Occurring two times a year, generally spaced six months apart.
- Identify and explain the various types of bonds and their characteristics.
Verified Answer
HH
Halla HaobshMay 11, 2024
Final Answer :
C
Explanation :
Income bonds pay interest only if the issuer has sufficient income to do so, distinguishing them from other types of bonds that have a fixed interest payment schedule regardless of the issuer's income.
Learning Objectives
- Identify and explain the various types of bonds and their characteristics.