What designation is given to a government bond lacking a fixed redemption date and offering perpetual duration ?
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Answer: D. Consol
Explanation
A consol is a perpetual government bond carrying no fixed maturity date. Investors receive regular coupon payments indefinitely without principal repayment. British historical debt management famously popularized the use of consols. Fixed-income securities provide investors with regular periodic interest distributions. Perpetual bonds lack expiration dates, meaning issuers never redeem the principal. Market interest rates heavily influence the trading price of perpetual bonds.
Governments historically issued consols to consolidate national debt obligations. Modern financial markets rarely issue perpetual bonds except in specialized contexts. Investors evaluate consols using perpetuity valuation mathematical formulas. Coupons refer to interest payments rather than the perpetual bond instrument itself. Treasury bills represent short-term debt instruments with fixed maturity dates. Debentures are corporate bonds backed by general credit rather than perpetual equity.
- Subject
- Engineering
- Category
- Civil Engineering
- Topic
- —
- Difficulty
- medium
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