What does holding a bond to maturity ensure for the investor?

Holding a bond to maturity ensures a stable return defined at the time of purchase, which is why this choice is correct. When an investor purchases a bond, they typically receive a fixed interest rate, known as the coupon rate, which is paid periodically until the bond matures. At maturity, the investor also receives the bond's face value, or principal amount. This creates a predictable cash flow for the investor, as they can count on receiving set interest payments and the return of the principal at maturity, regardless of changes in market interest rates or bond prices over the bond's life.

In contrast, capital gains tied to market price fluctuations would only be realized if the bond is sold before maturity; if held to maturity, any changes in market price are irrelevant to the returns received. Accessing the principal before maturity is not a feature of traditional bond investments, as the principal is tied up until the bond's maturity date. The opportunity to renegotiate the bond terms is also not applicable, since bondholders typically cannot modify the terms of the bond once it is issued.