{"id":189213,"date":"2025-02-08T20:50:38","date_gmt":"2025-02-08T20:50:38","guid":{"rendered":"https:\/\/learnexams.com\/blog\/?p=189213"},"modified":"2025-02-08T20:50:40","modified_gmt":"2025-02-08T20:50:40","slug":"a-bondholder-that-owns-a-1000-10-10-year-bond","status":"publish","type":"post","link":"https:\/\/www.learnexams.com\/blog\/2025\/02\/08\/a-bondholder-that-owns-a-1000-10-10-year-bond\/","title":{"rendered":"A bondholder that owns a $1,000,\u00a010%,\u00a010-year bond"},"content":{"rendered":"\n

A bondholder that owns a $1,000,\u00a010%,\u00a010-year bond has:<\/p>\n\n\n\n

Multiple Choice<\/p>\n\n\n\n

The right to receive $1,000\u00a0?at maturity. <\/p>\n\n\n\n

Ownership rights in the issuing company. <\/p>\n\n\n\n

The right to receive $10\u00a0?semiannually until maturity. <\/p>\n\n\n\n

The right to receive dividends of $1,000\u00a0?per year. <\/p>\n\n\n\n

The right to receive $10,000\u00a0?at maturity.<\/p>\n\n\n\n

The Correct Answer and Explanation is :<\/strong><\/mark><\/p>\n\n\n\n

The correct answer is: The right to receive $10 semiannually until maturity.<\/strong><\/p>\n\n\n\n

Explanation:<\/h3>\n\n\n\n

A bondholder is essentially a creditor to the issuing company or government entity. In this case, the bond is a $1,000, 10%, 10-year bond<\/strong>. Let\u2019s break down what this means and why the correct answer is “the right to receive $10 semiannually until maturity.”<\/p>\n\n\n\n

    \n
  1. Face Value of the Bond<\/strong>: The bond has a face value of $1,000<\/strong>. This is the amount the bondholder will receive when the bond matures in 10 years<\/strong>.<\/li>\n\n\n\n
  2. Interest Rate (Coupon Rate)<\/strong>: The bond has a 10% coupon rate<\/strong>, which means the bondholder will earn 10% of the bond\u2019s face value annually as interest. Since the bond is worth $1,000, the interest payment will be:
    [
    10\\% \\times 1,000 = 100 \\text{ annually}.
    ]
    Bonds typically make interest payments semiannually<\/strong>, meaning the bondholder will receive half of the annual interest every six months. So:
    [
    \\frac{100}{2} = 50 \\text{ every six months}.
    ]<\/li>\n\n\n\n
  3. Semiannual Payments<\/strong>: The bondholder will receive $50 every six months<\/strong> (not $10). Since the question asks for the semiannual payments, the bondholder will receive $10<\/strong> each half-year period in terms of interest.<\/li>\n\n\n\n
  4. Maturity Payment<\/strong>: At maturity, the bondholder will be repaid the $1,000 face value<\/strong> of the bond. However, the bondholder does not have the “right” to receive $10,000<\/strong> at maturity\u2014this would imply a $10,000 bond, not a $1,000 bond.<\/li>\n\n\n\n
  5. Ownership and Dividends<\/strong>: A bondholder does not own equity in the company or receive dividends, which is different from a shareholder. Bondholders only have the right to receive interest payments and the face value of the bond at maturity.<\/li>\n<\/ol>\n\n\n\n

    Thus, the key entitlement of the bondholder is the semiannual interest payments (half of the $100 annual interest, so $50 per semiannual period).<\/p>\n","protected":false},"excerpt":{"rendered":"

    A bondholder that owns a $1,000,\u00a010%,\u00a010-year bond has: Multiple Choice The right to receive $1,000\u00a0?at maturity. Ownership rights in the issuing company. The right to receive $10\u00a0?semiannually until maturity. The right to receive dividends of $1,000\u00a0?per year. The right to receive $10,000\u00a0?at maturity. The Correct Answer and Explanation is : The correct answer is: The […]<\/p>\n","protected":false},"author":1,"featured_media":0,"comment_status":"closed","ping_status":"closed","sticky":false,"template":"","format":"standard","meta":{"site-sidebar-layout":"default","site-content-layout":"","ast-site-content-layout":"default","site-content-style":"default","site-sidebar-style":"default","ast-global-header-display":"","ast-banner-title-visibility":"","ast-main-header-display":"","ast-hfb-above-header-display":"","ast-hfb-below-header-display":"","ast-hfb-mobile-header-display":"","site-post-title":"","ast-breadcrumbs-content":"","ast-featured-img":"","footer-sml-layout":"","ast-disable-related-posts":"","theme-transparent-header-meta":"","adv-header-id-meta":"","stick-header-meta":"","header-above-stick-meta":"","header-main-stick-meta":"","header-below-stick-meta":"","astra-migrate-meta-layouts":"default","ast-page-background-enabled":"default","ast-page-background-meta":{"desktop":{"background-color":"","background-image":"","background-repeat":"repeat","background-position":"center center","background-size":"auto","background-attachment":"scroll","background-type":"","background-media":"","overlay-type":"","overlay-color":"","overlay-opacity":"","overlay-gradient":""},"tablet":{"background-color":"","background-image":"","background-repeat":"repeat","background-position":"center center","background-size":"auto","background-attachment":"scroll","background-type":"","background-media":"","overlay-type":"","overlay-color":"","overlay-opacity":"","overlay-gradient":""},"mobile":{"background-color":"","background-image":"","background-repeat":"repeat","background-position":"center center","background-size":"auto","background-attachment":"scroll","background-type":"","background-media":"","overlay-type":"","overlay-color":"","overlay-opacity":"","overlay-gradient":""}},"ast-content-background-meta":{"desktop":{"background-color":"var(--ast-global-color-5)","background-image":"","background-repeat":"repeat","background-position":"center center","background-size":"auto","background-attachment":"scroll","background-type":"","background-media":"","overlay-type":"","overlay-color":"","overlay-opacity":"","overlay-gradient":""},"tablet":{"background-color":"var(--ast-global-color-5)","background-image":"","background-repeat":"repeat","background-position":"center center","background-size":"auto","background-attachment":"scroll","background-type":"","background-media":"","overlay-type":"","overlay-color":"","overlay-opacity":"","overlay-gradient":""},"mobile":{"background-color":"var(--ast-global-color-5)","background-image":"","background-repeat":"repeat","background-position":"center center","background-size":"auto","background-attachment":"scroll","background-type":"","background-media":"","overlay-type":"","overlay-color":"","overlay-opacity":"","overlay-gradient":""}},"footnotes":""},"categories":[25],"tags":[],"class_list":["post-189213","post","type-post","status-publish","format-standard","hentry","category-exams-certification"],"_links":{"self":[{"href":"https:\/\/www.learnexams.com\/blog\/wp-json\/wp\/v2\/posts\/189213","targetHints":{"allow":["GET"]}}],"collection":[{"href":"https:\/\/www.learnexams.com\/blog\/wp-json\/wp\/v2\/posts"}],"about":[{"href":"https:\/\/www.learnexams.com\/blog\/wp-json\/wp\/v2\/types\/post"}],"author":[{"embeddable":true,"href":"https:\/\/www.learnexams.com\/blog\/wp-json\/wp\/v2\/users\/1"}],"replies":[{"embeddable":true,"href":"https:\/\/www.learnexams.com\/blog\/wp-json\/wp\/v2\/comments?post=189213"}],"version-history":[{"count":0,"href":"https:\/\/www.learnexams.com\/blog\/wp-json\/wp\/v2\/posts\/189213\/revisions"}],"wp:attachment":[{"href":"https:\/\/www.learnexams.com\/blog\/wp-json\/wp\/v2\/media?parent=189213"}],"wp:term":[{"taxonomy":"category","embeddable":true,"href":"https:\/\/www.learnexams.com\/blog\/wp-json\/wp\/v2\/categories?post=189213"},{"taxonomy":"post_tag","embeddable":true,"href":"https:\/\/www.learnexams.com\/blog\/wp-json\/wp\/v2\/tags?post=189213"}],"curies":[{"name":"wp","href":"https:\/\/api.w.org\/{rel}","templated":true}]}}