A loan made to the government that pays a fixed amount of interest at a certain time is a _____.A.stockB.savings accountC.hedge fundD.bond
Question
A loan made to the government that pays a fixed amount of interest at a certain time is a _____.A.stockB.savings accountC.hedge fundD.bond
Solution
The answer is D. bond.
Here's why:
A bond is a type of investment that involves lending money to an entity (typically a corporation or government) in exchange for periodic interest payments plus the return of the bond's face amount when it matures.
A. Stock is a type of security that signifies ownership in a corporation and represents a claim on part of the corporation's assets and earnings.
B. A savings account is a deposit account held at a bank or other financial institution that provides principal security and a modest interest rate.
C. A hedge fund is an investment fund that pools capital from accredited individuals or institutional investors and invests in a variety of assets, often with complex portfolio-construction and risk-management techniques.
So, the correct answer is D. bond.
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