Which feature defines conventional UK government bonds?

• A. Fixed coupon and single redemption date
• B. Floating coupon with multiple redemption dates
• C. Inflation-indexed coupon and redemption
• D. Strippable into separate cash flows

Answer: (A)

Conventional UK government bonds are defined by a fixed coupon paid on the bond’s face value and a single redemption date at maturity. This means the coupon rate stays constant for the life of the bond, with regular payments, and the principal is repaid in full when the bond matures. This differs from inflation-linked gilts where coupons and redemption adjust for inflation, floating-rate notes with variable coupons, or stripped gilts where cash flows can be separated into individual pieces. So the key feature is a fixed coupon with one maturity date.