A debt which is repaid on specific future date is
called
(1)Voluntary debt
(2)Internal debt
(3)Redeemable debt
(4)Funded debt
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When a company borrows money to be paid back at a future date with interest it is known as debt financing. It could be in the form of a secured as well as an unsecured loan.
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The debt that is repaid after a specific interval of time in the future is called 3) Redeemable debt.
Redeemable debt
- Redeemable debt, also known as callable debt, is the debt amount which can be paid anytime prior to the maturity debt.
- The interest rate will be paid by the schedule and coupon date and the principle is supposed to be paid on the maturity date that is stated on the bond.
- For example, a company issued 10,00,000 redeemable bonds at a coupon interest of 9 % and at a value of $1000 per redeemable bond. The bonds will thus mature in 10 years' time and the issuer has the choice to redeem the pact before the stated maturity date.
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