Although the interest rate is fixed when the bond is issued, the interest rate that one firm must pay compared to another may vary depending upon risk factors such as the reputation of the firm.

Question

Quizplus · Accepted Answer

This statement is true. The interest rate that a firm must pay on a bond can vary depending on a number of factors, including the risk associated with the firm. A firm with a better reputation and less risk may be able to obtain a lower interest rate than a firm with a poor reputation and more risk.

Although the Interest Rate Is Fixed When the Bond Is