n NISM Certifications
XV NISM Series XV
Medium

For plain vanilla fixed-rate bonds, which of the following are certain and known to bond investors? A- Capital Appreciation, B- Amount of cash flows and C- Timing of cash flows

Practice question from NISM XV Mock Test 3 — bank. The correct answer is highlighted below with a full explanation.

Options

  1. A

    Only A and B

  2. B

    Only A

  3. Only B and C

    Correct answer

  4. D

    All A, B and C

Why this is the answer

Plain vanilla fixed-rate bonds pay fixed interest (coupon) amounts at regular intervals and return the principal at maturity. Therefore, both the amount and timing of cash flows are known. Capital appreciation is not guaranteed and depends on market conditions.

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NISM XV Mock Test 3