Question

What happens when a bond becomes due? AYou pay it back to the issuer, minus interest. BThe issuer will pay you back, minus interest. CYou pay it back to the issuer, plus interest. DThe issuer will pay you back, plus interest.

Answer 1

When a bond becomes due B) The issuer will pay you back, minus interest. You can use this basic concept to understand the bond basic principle: A company issues bonds in order to borrow a specific amount of money and pays the interest in return. Therefore, a bond buyer will receive the interest for his/her money and the company will return the amount it has borrowed.