A bond represents a debt for an organization.

a. True

b. False

a. True

Explanation:

An organization's capital is financed by the owners' funds known as equity or borrowed fund referred to as debt financing. An organization may borrow directly from lending institutions such as banks or can issue debt instruments through the financial markets. Bond is one of the debt instruments that companies issue to raise capital through financial markets.

A bond is an agreement between the bond issuer and the investor, where the issuer promises to pay the stated amount to the bondholder at the stated period. The investor buying the bond is equivalent to lending to the issuer. Bonds are a fixed income earner to the investors as they pay regular and fixed interest through their life. At maturity, the issuer pays the investor the maturity value of the bond.