Assume that you purchase and will hold your investment to maturity or expiration. Which of the following instrument will have certainty future cash flows when you make your initial purchase?
A) Futures.
B) Put options.
C) Stocks.
D) Bonds.
E) Call options.

Question

Quizplus · Accepted Answer

Bonds are debt instruments that have a fixed rate of interest and a maturity date. The cash flows associated with a bond (coupon payments and the principal repayment) are contractually specified and thus certain at the time of purchase. Futures, stocks, options have uncertain cash flows and their values are dependent on multiple factors that may fluctuate significantly over time.

Assume That You Purchase and Will Hold Your Investment to Maturity