Nate purchased an interest-bearing security last year, planning to hold it until maturity. He received interest payments, and, to his surprise, a sizable amount of the principal was paid back in the first year. This happened again in year 2. What type of security did Nate purchase?

Question

Business

Mattie Lang

11 May, 01:10

Nate purchased an interest-bearing security last year, planning to hold it until maturity. He received interest payments, and, to his surprise, a sizable amount of the principal was paid back in the first year. This happened again in year 2. What type of security did Nate purchase?

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Answers (2)

Know the Answer?

Wyatt Parrish · Answer 1

The type of security that Nate purchased is an asset backed security

Explanation:

Based on the illustration given in the question, Nate purchased an asset backed security.

An asset-backed security is a financial security such as a bond or note which is collateralized by a pool of assets such as loans, leases, credit card debt, royalties, or receivables.

Damarion Fernandez · Answer 2

asset-backed securtiy

Explanation:

Based on the scenario being described within the question it can be said that in this situation Nate seems to have purchased an asset-backed securtiy. This is a security that derives it's value and pre-defined pool of different assets which generate the income payments or interest payments that Nate seems to be receiving.