If an investor expects to receive a bullet payment, they are likely to be invested in a:

If an investor expects to receive a bullet payment, they are likely to be invested in a:
A . Treasury bond
B . Zero coupon bond
C . Convertible bond
D . Premium bond

View Answer

Answer: B

Explanation:

Understanding Bullet Payments:

A bullet payment is a single payment of principal and interest at maturity.

Zero coupon bonds do not provide periodic interest payments, making them associated with bullet payments.

Elimination of Other Options:

A: Treasury bonds typically pay semiannual interest.

C: Convertible bonds may have periodic interest.

D: Premium bonds involve prize draws, not bullet payments.

Reference: ICWIM Module 3: Coverage of fixed income securities and payment structures.