Final answer:
A structured note is a bond issued by a financial services company that has a rate of return linked to other securities, combining bond-like and derivative-like features. It is not a trust, a municipal bond, or an insurance contract. Therefore correct option is D
Step-by-step explanation:
Which of the following is true of a structured note? The correct answer is (d) it's a bond issued by a financial services company which offers a rate of return that's linked to other securities.
A structured note is a debt security issued by financial institutions. Its return is based on equity indexes, a single equity, a basket of equities, interest rates, commodities, or foreign currencies. The return on a structured note may include the promise of some return of principal, thus combining both bond- and derivative-like features. The other options described (a trust owned by a large number of small investors, a bond for an infrastructure project, a contract guaranteeing income for life) do not correspond with the definition of a structured note.
Bonds traditionally involve a borrower agreeing to repay the borrowed amount along with interest over a future period. Entities like corporations and varying levels of government issue bonds, such as municipal bonds, state bonds, and Treasury bonds. However, structured notes are more complex instruments designed to fit specific investor needs or market conditions.