A fixed-income security pays ____________.
A)a fixed level of income for the life of the owner
B)a fixed stream of income or a stream of income that is determined according to a specified formula for the life of the security
C)a variable level of income for owners on a fixed income
D)a fixed or variable income stream at the option of the owner
E)none of the above

Question

Quizplus · Accepted Answer

A fixed-income security typically pays a fixed stream of income or a stream of income that is determined according to a specified formula for the life of the security. This can include bonds, treasury bills, and other debt securities that provide a fixed rate of return to the investor. Option A is incorrect because fixed-income securities may not necessarily be for the life of the owner, but rather for the life of the security. Option C is incorrect because it suggests that fixed-income securities may provide a variable level of income, which is not typically the case. Option D is incorrect because the income stream is typically fixed or predetermined, rather than being at the option of the owner. Option E is incorrect because at least one of the other options must apply to fixed-income securities.

A Fixed-Income Security Pays ____________