If Bonds Are Issued at a Discount the Issuing Corporation

question 167

True/False

If bonds are issued at a discount the issuing corporation will pay a principal amount less than the face amount of the bonds on the maturity date.

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Definitions:

Negotiability

The quality of a financial instrument that allows it to be transferred or assigned from one party to another with ease.

Unconditional Promise

A commitment to act or refrain from acting in a certain manner that does not rely on any conditions or occurrences for its fulfillment.

IOU

An informal document that acknowledges a debt owed by one party to another, but not necessarily specifying repayment terms.

Acknowledging A Debt

An act by which a debtor recognizes their debt and reaffirms their obligation to pay it, often to prevent the statute of limitations from expiring.