Question

Read each question and choose the best answer.

Name one advantage of bonds for their issuers.

A.
Bonds have the potential to be downgraded.

B.
Issuers can’t change interest payments even when rates have dropped.

C.
Issuers must make fixed interest payments, even when it doesn’t make a profit.

D.
Bondholders can’t share in the profits of a company.

Answer 1

Issuers must make fixed interest payments, even when it doesn’t make a profit. The correct answer is option C.

Step-by-step explanation:

One advantage of bonds for their issuers is that issuers must make fixed interest payments, even when it doesn’t make a profit.

When a company issues bonds, it agrees to pay interest to bondholders at a fixed rate, regardless of its financial performance. This can provide stability for the issuer and attract investors who are looking for a consistent income stream.