Question

Select the proper term for each definition.

a. A promise to pay issued by a borrower with annual interest payments and a principal payment at maturity.
b. A share of ownership in a company
c. Funds that are kept in a bank that must be relinquished upon the owner's request
d. An agreement between a lender and a borrower

1. Stock
2. Bank Deposit
3. Loan
4. Bond

Answer 1

For the definitions given, the proper terms are Bond for a financial promise to pay, Stock for a share of ownership in a company, Bank Deposit for funds held at a bank, and Loan for an agreement between a lender and a borrower.

Step-by-step explanation:

Select the proper term for each definition:

1. A promise to pay issued by a borrower with annual interest payments and a principal payment at maturity - 4. Bond
2. A share of ownership in a company - 1. Stock
3. Funds that are kept in a bank that must be relinquished upon the owner's request - 2. Bank Deposit
4. An agreement between a lender and a borrower - 3. Loan

Bonds are issued by various entities such as corporations, cities (municipal bonds), states (state bonds), and the federal government (Treasury bonds). They represent a financial contract stipulating that the issuer will repay borrowed money, along with interest, by a specific maturity date. Owning stocks means holding a share of a company, which could potentially yield capital gains through an increase in stock price. A bank deposit is money stored in a financial institution, providing safety and accessibility. Finally, a loan is a contractual agreement where a lender provides funds to a borrower with the expectation of repayment plus interest.

Answer 2

a. loan

b. stock

c. bank deposit

d. bond

Step-by-step explanation:

A stock is when a person buys ownership rights in a company. The holder of the share is known as a shareholder and receives dividends

A bond is when an entity borrows money. The lender is known as a bondholder. The bondholder is entitled to periodic interest payments. At maturity, the bond holder receives principal

A bank deposit is when an account holder at a bank deposits money in a bank. The account could be a savings or a current account