Question

A bondholder that owns $1,000, 10%, 10 year bond has:

The right to receive dividends of 1000 per year

The right to receive 10,000 at maturity

Ownership rights in the issuing community

The right to receive 10 per year until maturity

The right to receive 1000 at maturity

Answer 1

Based on the above question, the correct answer is Option E - The right to receive 1000 at maturity. $1,000 is the face value of the bond that will be received by the bondholder at the time of maturity. However, the bondholder will receive period interest payments based on the stated rate of interest on the bond.

Option A is incorrect. Only the common or preferred stockholders would be entitled to receive dividends . Bond holders receive interest payment on their bonds.

Option B is incorrect. The value that will be received by the bondholder at maturity would be restricted to the face value of the bonds. As such, $1,000 would be the correct answer and not $10,000

Option C is incorrect. Bondholders do not have ownership rights in the issuing community. Only preferred and common stockholders do. Hence, this option is incorrect.

Option D is incorrect. The rate of interest on the bond is 10% on a face value of $1,000. The bondholers would receive $100 per year till the maturity of the bond.