Question

What is the amount due that must be paid at the due date of a note receivable?

A) Interest
B) Maturity value
C) Face value
D) None of these choices

Answer 1

The amount due at the due date of a note receivable is the maturity value, which includes the bond's face value and any accrued interest. This is the sum the bond issuer is obligated to pay the bondholder at the end of the bond's term.

Step-by-step explanation:

The amount due that must be paid at the due date of a note receivable is known as the maturity value. The maturity value comprises the face value of the bond, plus any interest payments that are due on the maturity date.

When a bond is issued, it includes a face value, which is the principal amount the issuer agrees to pay back at maturity, and a coupon rate, indicating the interest that will be paid periodically to the bondholder. On the date of maturity, the bondholder is entitled to receive the face value along with the last installment of interest payment, thereby settling the bond's maturity value.