Refer to the preceding two questions. Describe the circumstances under which a firm would report a net

Question:

Refer to the preceding two questions. Describe the circumstances under which a firm would report a net gain from its borrowing activities. Give an example and the general principle. You may find using zero bonds as examples a good way to think about these issues, although the principles apply to all forms of borrowing.

Coupon
A coupon or coupon payment is the annual interest rate paid on a bond, expressed as a percentage of the face value and paid from issue date until maturity. Coupons are usually referred to in terms of the coupon rate (the sum of coupons paid in a...