Question

Which of the following types of investments generate interest income? (Check all that apply.)

A. Savings accounts
B. Certificates of deposit
C. Government bonds
D. Corporate stock
E. Corporate bonds

Answer 1

Savings accounts, certificates of deposit, government bonds, and corporate bonds generate interest income.

Step-by-step explanation:

Of the options provided, the types of investments that generate interest income include:

• Savings accounts: Savings accounts typically offer interest on the balance held in the account. This interest is usually calculated based on the average daily balance and credited monthly or quarterly.
• Certificates of deposit (CDs): CDs are time deposits with fixed maturity dates. They pay a fixed interest rate for the duration of the term, and when the CD matures, the invested amount plus interest is returned to the investor.
• Government bonds: Government bonds are debt securities issued by the government to raise capital. Investors who purchase these bonds receive interest payments periodically until the bond's maturity.
• Corporate bonds: Corporate bonds are debt securities issued by corporations to finance their operations or projects. They pay interest to investors for a specified period.

Therefore, the correct answers are: A. Savings accounts, B. Certificates of deposit, C. Government bonds, and E. Corporate bonds.