What is a Term Bond?

A term bond is characterized by the fact that it consists of a large block of bonds that all mature in a single year. This structure differentiates term bonds from other types of bonds, such as serial bonds, which mature at different times over a series of years. Investors appreciate term bonds as they provide a clear timeline for when the principal amount will be returned, which can assist in future financial planning.

Additionally, term bonds often offer fixed interest rates, making them an attractive investment for those seeking predictable income streams. The focus on a single maturity date often involves issuing bonds in larger amounts, which can help in achieving economies of scale for the issuer, potentially lowering the cost of borrowing compared to issuing smaller denominations with staggered maturities.

The other options describe features or characteristics that do not align with the definition of a term bond. Therefore, understanding the specific characteristics of term bonds is vital for both investors and issuers within the context of governmental financing and bond markets.