Question : Case Study 4:
PQR Ltd. is a startup in the renewable energy sector looking to raise capital for its ambitious project.
Question :
PQR Ltd. is considering issuing bonds with a fixed interest rate and a maturity period of five years. 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
The type of bonds described, with a fixed interest rate and a maturity period of five years, are typically referred to as corporate bonds. Corporate bonds are debt securities issued by corporations to raise capital. They pay a fixed interest rate (coupon) to bondholders over a specified period until maturity when the principal amount is repaid.
