Pure Discount Bonds, Which Are Created by Separating the Interest

question 92

Multiple Choice

Pure discount bonds, which are created by separating the interest and principal payments from U.S. Treasury bonds, are called U.S. Treasury:

• A)notes.
• B)bills.
• C)STRIPS.
• D)SWAPS.
• E)tax-exempts.

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Definitions:

Fixed-Income Securities

Investments that provide regular income payments, such as bonds or treasury bills, with predetermined interest rates.

Money Market Securities

These are short-term debt instruments, typically with maturities of less than one year, used by governments, financial institutions, and corporations to finance their short-term cash needs.

Net Asset Value

The value of an entity's assets minus the value of its liabilities, often used in the context of mutual and exchange-traded funds.

Dividend Income Distributions

Payments made by a corporation to its shareholders, often derived from the company's earnings, representing a share of the profits.