How often are semi-annual interest payments made to bondholders?

Prepare for the Certified Municipal Finance Officer Exam. Study with flashcards and multiple choice questions, each question has hints and explanations. Set yourself up for success!

Semi-annual interest payments to bondholders occur twice a year. This practice is common in the bond market and is specified in the bond's indenture, which outlines the terms and conditions of the bond. When an investor purchases a bond, they are effectively lending money to the issuer in exchange for periodic interest payments, referred to as coupon payments. Since "semi-annual" literally means "twice a year," bondholders typically receive these interest payments at regular intervals, often occurring every six months. This structure allows investors to receive income at more manageable intervals compared to other payment frequencies, such as monthly or quarterly. In contrast, the other options reflect different frequencies that do not align with the semi-annual payment structure.

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