What defines a long-term fixed income instrument?

A long-term fixed income instrument is characterized by a loan arrangement, typically issued as bonds or similar debt securities, that pays interest over an extended and specified period, which can range from several years to decades. This instrument provides investors with a predictable stream of income through regular interest payments until the maturity date, at which point the principal is repaid.

In this context, the emphasis on a "long-term" duration is crucial because it differentiates these instruments from short-term securities, like treasury bills or other debt instruments that mature in less than one year, which do not fit the definition. Additionally, these long-term instruments usually involve fixed interest rates, as opposed to those that only offer variable payments or are traded like stocks, which would reflect a daily price adjustment rather than a set income over time. Thus, the characteristics of stability and predictability associated with long-term fixed income instruments make option B the fitting choice.