A bond that only pays interest if the firm has sufficient earnings to cover the interest payments is called what?

Question

Quizplus · Accepted Answer

This type of bond is called an Income bond. It is a type of bond that only pays interest if the firm has sufficient earnings to cover the interest payments. If the firm has a loss, the interest payment may be deferred until the next period when the firm has sufficient earnings to cover the interest payments. This type of bond is also known as an adjustment bond or variable-rate bond.

A Bond That Only Pays Interest If the Firm Has