Type of bond which pays interest payment only when it earns is classified as__________?
Correct answer: A. Income bond
- A. Income bond
- B. Interest bond
- C. Payment bond
- D. Earning bond
Explanation
An income bond promises interest only when the issuing company has sufficient earnings to make the payment. This differs from a regular bond, which normally requires scheduled interest payments regardless of current earnings.
Report an error
The more specific you are, the faster it gets fixed. A source beats an opinion.
Prefer email? support@testustad.com
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.
Practise Business Finance
975 free Business Finance MCQs from Management Sciences, each with the correct answer and an explanation. Unlimited attempts, no account needed.
Exams that ask Management Sciences questions like this
Management Sciences is on 2 papers prepared for on TestUstad, and all of them draw the same bank, so this question is worth knowing for every one of them.
More Business Finance questions
Price of an outstanding bond increases when market rate___________?
A bond whose price will rise above its face value is classified as________?
Stated value of bonds or face value is considered as_____________?
An average inflation rate which is expected over life of security is classified as__________?
An inflation rate includes in bond's interest rates is one which is inflation rate________?
A market interest rate for specific type of bond is classified as bond's_____________?