Answer
The answer is C. Interest payments and principal repayment.
Explanation
This question asks about the ways investors profit from debt investments. Investors primarily make money from debt through interest payments and principal repayment.
Here are further explanations.
- Option A: Capital appreciation. While some debt instruments might appreciate in value, this is not the primary way investors profit. Capital appreciation is more common with equity investments (stocks)
- Option B: Dividends. Dividends are payments made by companies to their shareholders (equity holders), not debt holders.
- Option C: Interest payments and principal repayment. This is the correct answer. Investors earn interest income periodically throughout the life of the debt instrument and receive the principal (the original amount invested) back at maturity.