Which One of the Following Statements Regarding an Original Issue

question 70

Multiple Choice

Which one of the following statements regarding an original issue $25,000 GNMA bond is correct?

• A)The investor will receive $25,000 as a principal payment at maturity.
• B)The investor will receive fixed quarterly interest payments.
• C)The investor will receive the future value of $25,000 at maturity.
• D)The investor will receive payments totaling $25,000 over the life of the bond.
• E)The investor should receive more than $25,000 but the amount of each payment is unknown in advance.

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Definitions:

Capital Gain Yield

The change in the price of a security or investment over time, not including dividends or interest earnings, usually expressed as a percentage.

Risk Premium

The additional return expected by an investor for holding a risky asset over a risk-free asset, compensating for the higher risk.

Common Stocks

Equity securities that represent ownership in a corporation, giving the holder voting rights and a share of the company's profits via dividends.