plain vanilla

问题如下：

Which kind of bond has a fixed periodic payment schedule that reduces the bond's outstanding principal amount to zero by the maturity date?

选项：

A.

bullet bond.

B.

plain vanilla bond.

C.

fully amortized bond.

解释：

Correct Answer: C

A fully amortized bond calls for equal cash payments by the bond's issuer prior to maturity. Each fixed payment includes both an interest payment component and a principal repayment component such that the bond's out-standing principal amount is reduced to zero by the maturity date.

A and B are incorrect because a bullet bond or plain vanilla bond only make interest payments prior to maturity. The entire principal repayment occurs at maturity.