In the City of Falmouth bonds example, what is the term of the bonds?

• A. 20 years.
• B. 30 years.
• C. 10 years.
• D. 15 years.

Answer: (C)

The term of bonds is the number of years until the final principal payment is due, i.e., the maturity date. In the City of Falmouth bonds example, the bonds are scheduled to mature in ten years, so the term is ten years. This determines how debt service is planned—the city makes interest payments during the term and pays the principal at the end. If the bonds were serial, principal would be repaid in installments over multiple years; since the example shows a single maturity at year ten, the term is ten years. Longer maturities would imply payments stretching to 15, 20, or 30 years, which isn’t the case here.