What happens when a bond becomes due?

Q. What happens when a bond becomes due?

1. The issuer will pay you back, minus interest.
2. The issuer will pay you back, plus interest.
3. You pay it back to the issuer, plus interest.
4. You pay it back to the issuer, minus interest.

Answer: The issuer will pay you back, plus interest

When a bond becomes due, the issuer will pay you back, plus interest.

A bond has two cash flow streams.
1.) Interest payments made periodically,
2.) Principal or par value payment at the maturity date of the bond.

When a bond matures, i.e., the bond becomes due, the issuer will you back (the principal), plus the final interest payment.