Logan bought a bond that matures in 10 years and pays 6% interest.The bond had a face value of $10 000.He received 10 annual payments of $1358.68.This bond was [blank].

Question

Quizplus · Accepted Answer

An amortizing bond is a bond that pays regular payments of both principal and interest. In this case, Logan received annual payments of $1358.68, which is likely composed of both interest and a portion of the principal. This is different from a zero-coupon bond (C), which does not pay regular interest payments but instead sells at a discounted price and pays the full face value at maturity. A mortgage bond (A) is backed by real estate collateral, which is not mentioned in the problem. A Eurobond (D) is simply a bond issued in a currency not native to the country where it is sold, which is also not mentioned in the problem.

Logan Bought a Bond That Matures in 10 Years and Pays