Bond Maturities – How Corporate Bonds Get Paid Off
Term Maturity: Think: Term Life Insurance. Everything happens at once. One day you’re biking up a hill. There’s a sharp chest pain. Then blammo – you’ve got two coins on your eyes to pay the Boatman.
In term maturity, the whole bond issue is paid off on one previously specified date and companies usually set up an offsetting account to account for the huge bill coming due that day. It’s called a sinking fund and is not related to t...
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