(I) A discount bond requires the borrower to repay the principal at the maturity date plus an interest payment.(II) A coupon bond pays the lender a fixed interest payment every year until the maturity date, when a specified final amount (face or par value) is repaid.A) (I) is true, (II) false.B) (I) is false, (II) true.C) Both are true.D) Both are false.
B) (I) is false, (II) true
B) (I) is false, (II) true.
A discount bond is a bond that is sold at a price lower than its face value. The borrower does not make interest payments during the life of the bond, but rather it is sold at a discount to the face value and the borrower repays the full face value at maturity.
A coupon bond, on the other hand, pays the lender a fixed interest payment every year until the maturity date, when the face value of the bond is repaid.
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