Bond which is offered below its face value is classified as______________?
Correct answer: B. Original issue discount bond
- A. Present value bond
- B. Original issue discount bond
- C. Coupon issued bond
- D. Discounted bond
Explanation
An original issue discount bond is issued below its face value, with the investor’s return including the difference between the purchase price and maturity value. A coupon bond may be issued at par, a premium, or a discount, so that term is not specific enough.
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About Business Finance
Business finance explains how organisations plan, obtain and use money while balancing risk, return and liquidity. Topics include financial statements, time value of money, budgeting, working capital, capital structure, sources of finance, investment appraisal and cost of capital. Capital budgeting evaluates long-term projects, whereas working capital manages day-to-day operations.
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