Bonds are referred to as non-amortizable debt, which means:

A) interest is paid regularly during the term, usually semiannually whereas repayments of principal are annual.
B) interest is paid regularly during the term, usually semiannually, and repayments of principal are semiannual.
C) interest is paid regularly during the term, usually semiannually, whereas repayment of principal does not occur until the maturity date.
D) interest and principal are paid regularly during the term, usually annually.

Question

Kaitlin McLachlan · Accepted Answer

Final Answer : C, Explanation :  Non-amortizable debt means that the repayment of principal does not occur until the maturity date, which is only true for option C. Option A and D include repayments of principal during the term, while option B implies that there are only semi-annual repayments, which is not necessarily true for all bonds.

Definitions

Learning Objectives

Learning Objectives

Related questions