Debt is a contractual obligation that: (a) requires a repayment of a stated amou

Question

Debt is a contractual obligation that: (a) requires a repayment of a stated amount and interest over the period, (b) Both requires the payout of residual flows to the holders of these instruments and requires a repayment of a stated amount and interest over the period, (c) allows the bondholders to sue the firm if it defaults, (d) Both requires a repayment of a stated amount and interest over the period; and allows the bondholders to sue the firm if it defaults, or (e) requires the payout of residual flows to the holders of these instruments.

Explanation / Answer

Both requires a repayment of a stated amount and interest over the period; and allows the bondholders to sue the firm if it defaults

A bondholder need to to be repaid his interest and principle over time. It is an obligation for the borrower. If the borrower defaults on th eloan, The debtholder can sue the firm.

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