Question

Which statement is TRUE about adjustment (income) bonds?

Answer 1

Answer:

option A is correct answer

Explanation:

Scheduling of interest payments is also not consistent and there is no predictable sum of payments made.

A company issues an adjustment bond whenever it reorganizes its liabilities to cope with financial problems or imminent bankruptcy. Adjustment bonds have such a mechanism where payments only occur when company has profits.

It also gives companies the ability to change terms like interest rates & time to completion, gives the company a better chance to fulfill its obligations without going into bankruptcy.