- CFA Exams
- CFA Level I Exam
- Study Session 14. Fixed Income (1)
- Reading 42. Fixed-Income Securities: Defining Elements
- Subject 4. Structure of a Bond's Cash Flows
CFA Practice Question
A company is considering issuing bonds to finance a project. The project is not expected to generate any income during the development phase, which may last for a few years. Which type of bonds would the company most prefer?
B. Deferred coupon bonds
C. Inverse FRNs
A. Credit-linked coupon bonds
B. Deferred coupon bonds
C. Inverse FRNs
Correct Answer: B
Deferred coupon bonds can delay interest payments when there's no cash inflow from the project.
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