A fixed-income security is defined as:
A) a debt obligation that pays a fixed rate of return for a one-year period of time.
B) common or preferred stock that pays a fixed annual dividend.
C) a long-term debt obligation that pays scheduled fixed payments.
D) long-term debt issued solely by a federal or state government.
E) any security originally issued as either debt or equity that pays a fixed, pre-set payment.

Question

Quizplus · Accepted Answer

A fixed-income security is a type of investment that provides a fixed periodic payment to the investor, such as a bond or a certificate of deposit. Choice C best describes this type of investment, as it states that the security is a long-term debt obligation with scheduled fixed payments. Choices A, B, D, and E do not fully capture the definition of a fixed-income security.

A Fixed-Income Security Is Defined As