What is a bond?

A: a small portion of ownership in a company

B: a payout distributed by corporations

C: a form of promissory note with the bond holder as creditor

D: the interest paid on a small loan

D the interest paid on a small loan

Answer: C

Explanation: A Bond is a fixed income security, it is also a debt instrument created for the main purpose of raising Capital. Its a loan agreement where a bond issuer is the debtor and the bond investor is the creditor. The bond issuer pays an agreed interest on the bond to the investor for an agreed period of time.

There are 4 major types of bonds, they are:

1. Corporate Bonds: issued by a corporate body to raise funds to cover its expenses and other financial obligations.

2. Government Sponsored Enterprises Bonds: Are bonds issued to carried out public projects, give scholarships and assist farmers.

3. Government (Treasury) Bonds: Are bond used by Government to pay up their debts. its a long term investment spanning 10 years. they are the safest form of investment.

4. Municipal Bonds: They are usually issued by the state to pay for a states debts obligations and also to sponsor some special projects in the state.