Question

Which of the following statements about a bond are true? i. A bond is a fixed-income security ii. The bond's interest payments vary each year with the market iii. A bond acts like an interest-only loan

Answer 1

The correct answer is letter "G": i and iii.

Step-by-step explanation:

Bonds are less-risky assets that provide investors a fixed income at the date of the bind maturity based on a fixed interest rate (coupon) inherent to the bond. For that reason bonds are considered interest-only loans. Bonds are tradeable assets issued by companies just like stocks and their exchange is regulated by the Securities and Exchange Commission (SEC).

Answer 2

i. A bond is a fixed-income security.

Step-by-step explanation:

A bond is considered as a fixed income security because it offers a fixed interest payment based on the coupon rate to its investors. The bond is an instrument whose coupon rate is fixed and predefined. It provides periodic interest payments to bondholders and the principal amount is repaid at a predefined maturity date.

The bond interest payments does not vary with the market and is not an interest only loan. The correct statement is i.