Question

Adonis Corporation issued 10-year, 8% bonds with a par value of $200,000. Interest is paid semiannually. The market rate on the issue date was 7.5%. Adonis received $206,948 in cash proceeds. Which of the following statements is true?
A. Adonis must pay $200,000 at maturity and no interest payments.
B.Adonis must pay $206,948 at maturity and no interest payments.
C.Adonis must pay $200,000 at maturity plus 20 interest payments of $8,000 each.
D.Adonis must pay $206,948 at maturity plus 20 interest payments of $8,000 each.
E.Adonis must pay $200,000 at maturity plus 20 interest payments of $7,500 each

Answer 1

Adonis must pay $200,000 at maturity plus 20 interest payments of $8,000 each.

Explanation:

Corporate bonds are enacted in the securities market by companies which borrow money. They are purchased by a brokerage company that serves as a subscriber and distributor for the problem and purchased by people and investment funds seeking to invest and paying interest in the invested money.

While the bond rates have decreased this year, the interest rates for high-quality US companies ' 7-10-year bonds have decreased by about 3,14% compared to the Treasury's 10 years, which closed all-time by 1,37%