A bondholder that owns a $1,000,10%,10-year bond has:
A)Ownership rights in the company who issued the bond.
B)The right to receive $10 per year until maturity.
C)The right to receive $1,000 at maturity.
D)The right to receive $10,000 at maturity.
E)The right to receive dividends of $1,000 per year.

Question

Quizplus · Accepted Answer

A bondholder has the right to receive the face value of the bond, which is $1,000, at maturity. The 10% refers to the annual interest rate, meaning the bondholder receives $100 per year in interest, not $10 or $10,000. Bondholders do not have ownership rights or rights to dividends.

A Bondholder That Owns a $1,000,10%,10-Year Bond Has