When a bond is issued between interest payment dates, the issuer of the bond will receive an...

Question:

When a bond is issued between interest payment dates, the issuer of the bond will receive an interest payment from the buyer at the time that the bonds are issued.

True

False

Financing a Business:

In order to make profit, companies need resources such as machinery, labour, materials and cash to pay for services used in running the business. The capital that finances the resources includes issuing shares, or bonds and borrowing money.

Answer and Explanation:

A bond is an agreement where a company borrows money from an investor or a group of investors and pays periodic interests payments for an agreed period before repaying the debt. Sometimes the debt is settled at a premium or at a discount. The interest accrues over time and it is paid to the investor at specified dates, usually annually or every six months. The issuer is the company that borrowed money, interest is paid to the investor and should the investor sell the bond before the payment, the selling price will include compensation for the accrued interest.

Therefore the answer is False.


Learn more about this topic:

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Long-Term Debt: Definition, Cost & Formula

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