Question

The accrued interest on a bond __________.

a. applies only to zero coupon bonds
b. avoids personal income taxation
c. is paid by the buyer of the bond to the seller of the bond
d. is the result of the possibility of the bond defaulting

Answer 1

The answer is C.

Step-by-step explanation:

Accrued interest on a bond is the interest on the bond that has accumulated on the principal.

The buyer(issuer) of a bond pays both the principal and interest to the bondholder or the investor at maturity.

The interest being paid is the difference between the principal and the total amount paid at maturity.