CFA Level I · CFA Level I Exam · Fixed-Income Issuance and Trading
A corporation issues a bond that pays a fixed coupon and returns the full principal in a single payment on the maturity date. This bond is best described as having which type of principal repayment structure?
The bond has a bullet structure. It pays periodic coupons and repays the entire principal in one payment at maturity. Amortizing bonds repay principal gradually, and sinking fund provisions retire portions of the issue early, so neither describes this single-payment repayment.
- ABulletCorrect
- BFully amortizing
- CSinking fund
Explanation
A bullet bond pays periodic coupons only and repays the whole principal at maturity. A fully amortizing bond repays principal in installments over its life. A sinking fund involves scheduled retirement of part of the issue before maturity, so it does not match a single principal payment.
Did you get it right without looking?
One question tells you little. A timed set on Fixed-Income Issuance and Trading shows your real accuracy, how long you take and where you lose marks.
More Fixed-Income Issuance and Trading questions
- Which of the following best describes how most corporate bonds are traded in the secondary market?
- An investor compares a Eurobond issued by a Brazilian company, denominated in euros and sold to investors across several countries, with a f…
- In a repurchase agreement, the party that sells the security and agrees to buy it back at a higher price on a later date is most likely desc…
- A bond issued by a national government in its own domestic currency and sold primarily to investors in that country is best described as a:
- Which feature most accurately distinguishes commercial paper issued by a large corporation from a repo as a source of short-term funding?
- An investor wants to sell a large block of an illiquid corporate bond without moving the price. The venue most likely to help is: