Which option correctly describes the interest payments associated with CMB?

When discussing Canada Mortgage Bonds (CMB), it is essential to recognize that the interest payments associated with them are indeed guaranteed semi-annually by the Canada Mortgage and Housing Corporation (CMHC). This guarantee provides a level of security for investors, making CMBs an attractive investment option.

The semi-annual payments mean that investors receive a consistent income stream at regular intervals, aligning with the predetermined schedule of the bond, which helps in financial planning for those relying on this income. The guarantee from CMHC further underscores the government backing of these bonds, which enhances their stability and reduces perceived risk.

In contrast, other options suggest variability or different structures that do not accurately represent how CMB interest payments are structured. For instance, fluctuating interest rates would imply unpredictability in payments, and irregular payments based on borrower behavior would not align with the fixed nature of CMBs. Additionally, the assertion that payments do not include principal repayment is misleading, as CMBs typically focus on the steady income from interest, while the principal is returned at maturity rather than in the form of regular payments. Thus, the correct and most accurate description focuses on the guaranteed, semi-annual nature of the interest payments provided by CMHC.