True or False: In general, the provisions and terms of bond issues can be better customized to fit the needs of a wide variety of bondholders, while the provisions of term loans are less flexible.

Question

Madelynn Zhang

Business

8 November, 00:30

True or False: In general, the provisions and terms of bond issues can be better customized to fit the needs of a wide variety of bondholders, while the provisions of term loans are less flexible.

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Genevieve Clark · Answer 1

In general, the provisions and terms of bond issues can be better customized to fit the needs of a wide variety of bondholders, while the provisions of term loans are less flexible - FALSE

Explanation:

Bonds are those that are issued by the companies and government for the purpose of raising money. When anyone buys a bond you are giving the entity who issued the bond a loan and they will be paying you the face value of the particular bong at certain dates. They will also be paying you interest at regular interval of time.

When a company gets term loans it is necessary to pay certain amount as its interest to the till it completes paying the loan amount. Issuing bond is similar but the difference is that instead of getting money form bank the company is raising money form the public. Hence both are similar and it does not mean that provisions of term loans are less flexible.