Final answer:
A U.S. government bond is a type of Treasury bond issued by the federal government to provide a loan from an investor. Investors purchase government bonds to lend money to the government and receive regular interest payments and the return of the principal amount at maturity. The correct answer is option: C. It provides a loan from an investor to the federal government.
Step-by-step explanation:
The purpose of a US government bond is to provide a loan from an investor to the federal government (Option C). When investors purchase Treasury bonds, they are effectively lending money to the government. In return, the government agrees to repay the borrowed amount with interest over a specified period of time.
The federal Treasury Bonds are considered to be one of the safest investments since the U.S. government has a long history of consistent payments on its bonds. These bonds can be purchased by individuals, banks, and global sovereign funds. They remain a popular investment choice, often being bought even when yield rates are low due to their reputation for safety.