Question

Neumann Company issues 20-year bonds. Related to these bonds, Neumann is obligated to

a. reacquire the bonds when interest rates rise.
b. repay a certain amount at a specific date.
c. repay a certain

Answer 1

Bonds are financial contracts in which a borrower agrees to repay the borrowed amount. In the case of Neumann Company's 20-year bonds, the company is obligated to repay a certain amount at a specific date, which is 20 years from the date the bonds were issued. Therefore correct option is B

Step-by-step explanation:

Bonds are financial contracts through which a borrower agrees to repay the amount that it borrowed. When a firm issues bonds, it may choose to issue many bonds in smaller amounts that together reach the total amount it wishes to raise. The bond specifies an amount that the borrower will borrow, the amounts that will be repaid over time based on the interest rate when the bond is issued, and the time until repayment. In the case of Neumann Company and its 20-year bonds, Neumann is obligated to repay a certain amount at a specific date, which is 20 years from the date the bonds were issued.