The Principal Amount of a Bond Is the Amount

question 57

Multiple Choice

The principal amount of a bond is the amount:

• A)originally lent.
• B)of interest agreed upon when the bond was originally issued.
• C)paid to the bondholders on a regular basis.
• D)of interest the bondholder is entitled to when the bond matures.

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Definitions:

Auto Loan Payments

Regular payments made by a borrower to a lender for the use of borrowed money to purchase an automobile, typically including both principal and interest.

Discount Rates

Interest rates used to calculate the present value of future cash flows.

Cash Constraints

Financial limitations that restrict the ability to purchase or invest due to the unavailability of liquid assets or cash.

Opportunity Costs

The cost of foregone alternatives when one option is chosen over another, representing the benefits that could have been received by taking the alternate action.