An investor has three sources of dollar returns from a bond investment. Which of the following is NOT included among the three sources?
A) The semi-annual coupon payments.
B) The interest earned on reinvesting the coupon payments.
C) The principal paid at maturity.
D) The interest earned on reinvesting the last coupon and the principal.

Question

An investor has three sources of dollar returns from a bond investment. Which of the following is NOT included among the three sources? 
A) The semi-annual coupon payments.
B) The interest earned on reinvesting the coupon payments.
C) The principal paid at maturity.
D) The interest earned on reinvesting the last coupon and the principal.

Quizplus · Accepted Answer

The three sources of dollar returns from a bond investment are the semi-annual coupon payments, the interest earned on reinvesting the coupon payments, and the principal paid at maturity. The interest earned on reinvesting the last coupon and the principal is not a separate source of return, but rather a result of reinvesting the other two sources of return. Therefore, the answer is D.

An Investor Has Three Sources of Dollar Returns from a Bond