Final answer:
An IOU issued by the U.S. Treasury that matures in 25 years is an example of a Treasury bond, which is considered a very safe investment due to the consistent payment record of the U.S. government.
Step-by-step explanation:
An IOU issued by the U.S. Treasury that matures in 25 years is an example of a Treasury bond. Treasury notes (T-notes) have maturity dates ranging from 2 to 10 years, while Treasury bonds (T-bonds) have maturity dates that can extend to 30 years. Since the IOU in question matures in 25 years, it falls into the category of Treasury bonds, which like T-notes and T-bills, are popular due to the safety they provide based on the faith and credit in the U.S. government. Treasury bonds are generally issued in denominations of $1,000 to $5,000.
These securities are attractive to domestic and international investors, including individuals, banks, and global sovereign funds. The U.S. government has a strong track record of consistent payment on its bonds for over two centuries, making U.S. bonds a safe and desirable investment. Treasury bonds tend to pay more than bank accounts but will usually have lower interest rates compared to corporate bonds because the federal government is considered a safer borrower.