Final answer:
Companies commonly categorize assets into loans and bonds, with loans providing a return through interest over time and bonds being investments that also yield periodic returns, especially U.S. government bonds, which are considered low risk.
Step-by-step explanation:
Two categories of assets a company might use are loans and bonds. Loans are a financial asset for banks, as they generate a stream of payments from borrowers over time. On the other hand, bonds are another key category of assets. Organizations like federal and local governments, as well as private companies and nonprofit organizations, issue bonds to borrow money.
Banks invest in these bonds using the money they have received as deposits. An example of an asset in the bonds category is U.S. government bonds, which are considered low-risk because the U.S. government is almost certain to repay its debt, although the interest rate may be low.
Investors and companies consider many factors when investing in these financial assets, including the risk and return profile associated with each type of asset. Firms raising financial capital for long-term investments may do so via borrowing through banks or bonds, reinvesting profits, attracting early-stage investors, or selling stocks.