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A ________ is a formal pledge (an IOU) obligating the issuer to pay interest periodically and repay the principal at maturity (a preset future date) to the lender.

1 Answer

3 votes

Answer:

Corporate bond.

Step-by-step explanation:

A corporate bond is a formal pledge (an IOU) obligating the issuer to pay interest periodically and repay the principal at maturity (a preset future date) to the lender. It is basically, the debts issued by a business firm to bondholders, in order to raise capital.

Hence, bondholders such as creditors or investors do not have a claim to ownership in the business firm and as such are not eligible to receive dividends from the corporate bond issuer.

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User Khalid Usman
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