Because of the Interest That Must Be Repaid,a Bond Typically

question 97

True/False

Because of the interest that must be repaid,a bond typically can cost about twice the face amount that is borrowed.Thus,a $5 billion bond may actually cost taxpayers almost twice that amount by the time it is paid off.

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Definitions:

Compounded Quarterly

Interest calculation method where the interest earned is added to the principal every quarter, increasing the amount on which subsequent interest is calculated.

Small Claims Court

A court that deals with minor legal disputes involving small monetary amounts.

Compounded Monthly

This is the calculation of interest on an investment or savings where the interest earned each month is added to the principal, thereby increasing the amount on which future interest is calculated.

Fair Rate

A reasonable, equitable interest rate or charge for a loan or service, ensuring fairness to both the provider and the consumer.