Question

Which of the following statements regarding bonds and their terms is​ FALSE? A. The time remaining until the repayment date is known as the term of the bond. B. Bonds typically make two types of payments to their holders. C. By​ convention, the coupon rate is expressed as an effective annual rate. D. Bonds are securities sold by governments and corporations to raise money from investors today in exchange for a promised future payment.

Answer 1

Answer: Option C

Explanation:

A. Term of the bond refers to the time left to the maturity of the bond.

B. Bonds make two payments to their holders that is coupon payments and face value/ maturity value.

C. The coupon rate is expressed as the annual interest rate and the time to which the rate is to be compounded for calculating effective annual rate for ex - 6% compounded monthly.

D. Bonds are debt securities issues by govt. and private corporations in exchange of coupon and face value payments in future to the holders.