Question

Melodic Music, Inc., recently offered bonds for sale to the public. The unsecured corporate bond paid interest of 8% to investors for the 20-year life of the bonds. Melodic Music is obligated to

Answer 1

a. Pay the principal and interest at the date of maturity

Step-by-step explanation:

Options are "Pay the principal and interest at the date of maturity, Pay each owner their principal if and when they want to cash-in their investment, Pay stockholders their dividends, before paying bondholders their interest, List each bondholder as an owner in the company."

Melodic Music is obligated to pay the principal and interest at maturity as it is the basic obligation of a bond issuer and it is what separates the bond from equity.