CFA Level I · CFA Level I Exam · Fixed-Income Markets for Corporate Issuers
A corporate issuer sells a bond whose entire principal is repaid in a single payment on the maturity date, with periodic interest paid until then. This repayment structure is best described as a:
The structure is a bullet bond. All principal is repaid in one payment at maturity, while interest is paid periodically. Amortizing bonds and sinking fund bonds repay principal in stages before maturity, which does not match this description.
- Abullet bondCorrect
- Bsinking fund bond
- Camortizing bond
Explanation
A bullet bond repays the full principal in one payment at maturity. An amortizing bond repays principal gradually over its life. A sinking fund bond requires the issuer to retire part of the issue on a schedule before maturity, so it does not fit the description.
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