Join thousands of students who trust us to help them ace their exams!Watch the first video
Multiple Choice
Which of the following investment types is considered a fixed income investment?
A
Corporate bonds
B
Common stocks
C
Equity mutual funds
D
Preferred shares
Verified step by step guidance
1
Understand the concept of fixed income investments: Fixed income investments are financial instruments that provide regular, predictable income, typically in the form of interest payments or dividends. Examples include bonds and certain types of preferred shares.
Analyze the options provided: Corporate bonds, common stocks, equity mutual funds, and preferred shares.
Evaluate corporate bonds: Corporate bonds are a type of fixed income investment because they pay periodic interest (coupon payments) and return the principal amount at maturity.
Evaluate common stocks and equity mutual funds: These are equity investments, not fixed income. They do not provide predictable income but rather depend on market performance and dividends, which are not guaranteed.
Evaluate preferred shares: Preferred shares can sometimes be considered fixed income investments because they pay fixed dividends, but they are not as predictable as corporate bonds. Corporate bonds are the most definitive example of fixed income among the options.