What are serial bonds, and what benefit do they offer the issuer? Wha

QUESTION

What are serial bonds, and what benefit do they offer the issuer?

What will be an ideal response?

ANSWER

Answer: Serial bonds are bonds that mature at different dates. By not maturing at the same time, the issuer does not have to repay the bonds all at once. This helps the issuer avoid cash flow problems by staggering the bond repayments.
Explanation: Serial bonds mature at different dates. Usually portions of a particular bond issue will mature annually after a certain period. Each cycle of bonds must be repaid at their maturity date. Serial bonds help issuers avoid cash flow problems that could occur if bonds matured at the same time.