When a corporation issues a bond,it is

Question

Quizplus · Accepted Answer

When a corporation issues a bond, it is borrowing funds from the initial buyer of the bond. The corporation promises to pay interest on the bond at a fixed rate for a specified period of time, and to repay the principal (or face value) of the bond at maturity. Shareholders, on the other hand, receive dividends as a share of the corporation's profits, and are not directly involved in the issuance of bonds. Lending money to the owners of the corporation is not the correct answer, as the owners (i.e. shareholders) are not necessarily the recipients of the proceeds from a bond issuance.

When a Corporation Issues a Bond,it Is