Why is the term 'fixed income' used to describe this type of investment?

The term 'fixed income' is used to describe this type of investment primarily because the repayment amounts and timings are predetermined, particularly in the case of ordinary bonds. This predictability is a defining characteristic of fixed-income securities. Investors receive regular interest payments, known as coupon payments, at agreed-upon intervals, and at maturity, the principal is returned at a set date. This structure provides a level of security and stability in cash flows, making it distinctly different from equities, which do not guarantee returns and can be subject to significant variability in value.

The other options do not accurately reflect the nature of fixed-income investments. For instance, the market value of fixed-income securities can fluctuate due to changes in interest rates and credit conditions, which contradicts the idea that their market value is always the same. Additionally, while the interest rates on fixed-income securities remain constant for the life of the bond, they are not flexible based solely on the issuer; instead, rates are influenced by broader economic conditions and the issuer's creditworthiness. Lastly, while fixed-income securities can provide returns, they do not guarantee high returns like some equity investments might; their primary appeal lies in providing consistent income and principal security.