Which one of the following statements is correct?
A) Stock is a form of debt capital.
B) Stock must be repaid at maturity.
C) Bonds are a form of debt capital.
D) Bonds do not have to be repaid at maturity.
E) Interest payments to bondholders must be declared by the board of directors.

Question

Quizplus · Accepted Answer

Bonds are a form of debt capital, which means the issuer (borrower) takes on a liability to repay the principal amount borrowed plus interest to the investor (lender) over a set period of time. Stocks, on the other hand, represent ownership in a company and do not involve a contractual obligation to repay the investor. Therefore, statements A, B, D, and E are all incorrect.

Which One of the Following Statements Is Correct