Corporate Bonds
Which investments are traded according to average life rather than maturity dates?
ABS/MBS = average life (prepayment uncertainty). Traditional bonds = stated maturity.
Complete Analysis & Legal Rationale
Asset-backed securities (ABS), including mortgage-backed securities, are quoted based on average life rather than stated maturity because the underlying loans can be prepaid at any time, making the actual cash flow timing uncertain.
Distractor Autopsy (Why Other Options Are Traps)
FINRA exam writers design incorrect distractors using specific calculation mistakes and regulatory misconceptions. Review why each option succeeds or fails:
Corporate bonds are traded based on stated maturity dates.
Government bonds have fixed maturity dates.
Matches the verified teaching point in the explanation.
Fixed-rate capital securities have stated maturity dates.
Official Standard: Outline-level citation pending rule-specific upgrade. Verify against current FINRA Series 7 outline.