Floating Cubes Inc.,a large furniture corporation,decided to raise funds through bond.It sold each bond at $1,000 per bond and each bond would have a value of $1,000 at the end of its maturity period.Which of the following is being used by Floating Cubes Inc.to raise funds?

Question

Quizplus · Accepted Answer

Floating Cubes Inc. is issuing a bond with a face value of $1,000 and selling it for $1,000, which is typical of a zero coupon bond. Zero coupon bonds do not pay interest, but are sold at a discount and pay out the face value at maturity. Municipal bonds are issued by state or local governments, treasury bonds are issued by the federal government, junk bonds are high-risk bonds with low credit ratings, and floating rate bonds have fluctuating interest payments based on a specified benchmark rate.