easy · Financial Accounting liabilities-bonds-payable
What is the primary difference between a 'Term Bond' and a 'Serial Bond' regarding their principal repayment schedule?
- Serial bonds are always secured by specifically pledged collateral, while term bonds are always unsecured general debentures of an issuer.
- Term bonds typically permit the issuer to call and redeem the debt early, while serial bonds usually do not allow this at all.
- Term bonds repay principal in a single lump sum at maturity, while serial bonds repay principal in installments over several dates.
- Term bonds generally pay interest only annually, while serial bonds instead typically pay interest semiannually each year.
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