CFA Practice Question

There are 275 practice questions for this study session.

CFA Practice Question

Income bonds stipulate interest payment schedules, but the interest is due and payable only if the issuers earn the income to make the payments by stipulated dates. If the company does not earn the required amount, it does not have to make the interest payment and it cannot earn the required amount. Income bonds, therefore, are examples of ______.

A. fixed income investments
B. equities
C. pooled investments
Correct Answer: A

User Contributed Comments 7

User Comment
johntan1979 No matter what, bonds are still bonds... FIXED until they are converted.
Jwcohen The buyer is not taking ownership "equity" in the company buyer is still a lendor even if cash flows do not come through.
Shaan23 I chose equities cause it stated it does not have to make the interest payments if it does not have the money(Like Equity). Debt would liquidate stuff and you must pay off your debt.

Should've just went with a bond is a bond
farhan92 agree with Shaan23. Don't try overcomplicating your life
ascruggs92 This sounds like preferred shares, which are still considered fixed
Inaganti6 I chose A I'm smarter than shaan !
joeclark Bond = Debt Instrument
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