When the bond indenture provides that stated amounts of principal will become due during the term of the bond, the bond is called a _____ bond.
A)sinking fund
B)serial
C)callable
D)refunded
E)convertible

Question

Quizplus · Accepted Answer

When the bond indenture provides that stated amounts of principal will become due during the term of the bond, the bond is called a serial bond. A sinking fund bond is one where the issuer sets aside money at regular intervals in order to retire the debt. A callable bond is one where the issuer has the option to redeem the bond prior to maturity. A refunded bond is one in which an issuer calls their old bonds and replaces them with new ones. A convertible bond is one that can be converted into a specified number of shares of common stock.

When the Bond Indenture Provides That Stated Amounts of Principal