The investors of the coupon bond will receive cash flow very soon if the ____________?
Correct answer: C. interest payment is higher
- A. maturity is lower
- B. maturity is higher
- C. interest payment is higher
- D. interest payment is lower
Explanation
A higher coupon produces larger interim cash flows, allowing investors to recover more of their investment earlier rather than waiting mainly for maturity. A higher maturity delays the final principal payment, so it does not make cash flow arrive sooner.
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