Final answer:
The difference between the amount borrowed and the amount repaid when a note comes due is the interest. Interest compensates the lender for the risk and time value of money. The bond's maturity date, face value, and interest rates influence the bond's present value.
Step-by-step explanation:
When a note comes due, the difference between the amount borrowed and the amount repaid is interest. Essentially, interest is the cost of borrowing money and is calculated based on the interest rate of the loan or bond. When a bond reaches its maturity date, the borrower is obligated to pay back the face value or principal amount of the bond as well as the final interest payment.
This return to the lender or investor includes the original capital along with the interest earned over the period of the loan or bond. The face value, interest rate, maturity date, and market interest rates all contribute to determining a bond's present value, which is what a buyer would be willing to pay for such a financial instrument.