Final answer:
A bond represents a financial agreement where an issuer owes an investor a specified amount of money, including interest, by a certain date. The significant elements necessary to understand when dealing with bonds include its face value, coupon rate, and maturity date, which can be used to calculate the bond's present value.
Thus the corret opction is:a
Step-by-step explanation:
The subject of this question revolves around the components of a typical financial contract, specifically looking at a forward contract.
However, the information provided about bonds helps to shed light on one type of financial instrument that an investor might enter into with an entity looking to raise capital.
A bond consists of various elements that include its face value (the principal amount the issuer agrees to repay), a coupon rate (or interest rate), and a maturity date (the date on which the face value and final interest payment are due to the investor).
The combination of a bond's face value, its coupon rate, and maturity date, along with prevailing market interest rates, enables an investor to calculate the present value of the bond.
This calculated present value represents the maximum amount an investor would be willing to pay to acquire the bond, which may differ from the face value of the bond itself.