After amortizing the principal, a debt security that makes the same dollar payment every year is referred to as a
A)coupon bond.
B)fixed-payment security.
C)discount bond.
D)perpetuity.

Question

Quizplus · Accepted Answer

A debt security that makes the same dollar payment every year, after amortizing the principal, is referred to as a fixed-payment security. Choice A, a coupon bond, typically makes periodic interest payments and pays the principal at maturity. Choice C, a discount bond, is sold below its face value and pays the face value at maturity. Choice D, a perpetuity, pays a fixed amount at regular intervals forever, without any maturity date.

After Amortizing the Principal, a Debt Security That Makes the Same