A bondholder that owns a 1,000,101,000 at maturity.
The Correct Answer and Explanation is:
The correct answer is: $1,000.
Explanation:
A bondholder is an investor who owns a bond issued by a company or government. A bond is essentially a loan from the bondholder to the issuer. The issuer promises to pay back the bond’s face value (also called par value) at the maturity date, which is the date when the bond expires.
In this case, the bondholder owns a bond with a face value of $1,000. The phrase “owns a 1,000” means the bond has a face or par value of $1,000. The phrase “1,000,101,000 at maturity” appears to be a typographical error or a confusion in formatting. However, if we interpret it correctly in financial context, it seems to suggest that the bondholder will receive $1,000 at maturity, which is the standard repayment amount for one bond.
Most traditional bonds have a face value of $1,000, and unless stated otherwise, this is what the bondholder receives at maturity. In addition to the face value, the bondholder may have received interest payments over the life of the bond (called coupon payments), but these are separate from the final payment of principal.
For example, if a person buys a 10-year bond with a face value of $1,000 and a 5% annual coupon rate, they will receive $50 each year for 10 years, and then $1,000 at the end of the tenth year. This $1,000 payment is what is meant by “at maturity.”
In summary, the bondholder will receive $1,000 at maturity as repayment of the principal, regardless of interest earned over time. The figure mentioned points clearly to a bond with standard face value.
