Question : Case Study 13:
XYZ Corporation is a conglomerate planning to diversify its operations by entering the renewable energy sector.
Question :
XYZ Corporation is issuing bonds with a fixed interest rate and maturity period of 10 years to fund its renewable energy projects. What type of bonds are these?
Option 1: Convertible bonds
Option 2: Floating-rate bonds
Option 3: Zero-coupon bonds
Option 4: Corporate bonds
Correct Answer: Corporate bonds
Solution : The correct answer is (d) Corporate bonds
Corporate bonds are debt securities issued by corporations, such as XYZ Corporation. They come with a fixed interest rate and a specified maturity period (in this case, 10 years). Investors who purchase corporate bonds receive regular interest payments (fixed interest rate) and, upon maturity, receive the face value of the bond. This option aligns with the scenario where XYZ Corporation is issuing bonds with a fixed interest rate and 10-year maturity period to fund its renewable energy projects.
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