U.S. treasury bonds are: Select one: • a. Discounted financial instruments • b. Dividend paying financial instruments • c. Coupon financial instruments • d. Amortising financial instruments
Question
U.S. treasury bonds are: Select one: • a. Discounted financial instruments • b. Dividend paying financial instruments • c. Coupon financial instruments • d. Amortising financial instruments
Solution
U.S. treasury bonds are:
• c. Coupon financial instruments
Here's why: U.S. Treasury bonds are government debt instruments issued by the United States Department of the Treasury to finance government spending as an alternative to taxation. They pay periodic interest, also known as coupons, to the bondholders. The interest payments are made every six months until maturity, at which point the face value of the bond is paid to the bondholder. Therefore, they are considered coupon financial instruments.
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