Final answer:
A Performance Bond guarantees satisfactory completion of a project and is the correct answer among the options. It is distinct from corporate, municipal, state, and Treasury bonds, which are financial contracts for borrowing money.
Step-by-step explanation:
Among the options provided, the correct term that guarantees the performance between the principal and the obligee is a Performance Bond. A Performance Bond is essentially a surety bond issued by an insurance company or a bank to guarantee satisfactory completion of a project by a contractor. This type of bond is common in the construction industry and it protects the obligee (the project owner) in the event that the principal (the contractor) fails to fulfill their contractual obligations. Unlike corporate bonds or state bonds that are financial contracts for borrowing and repaying money over time, a Performance Bond specifically relates to the quality and timeliness of work performance.
Corporate bonds, municipal bonds, state bonds, and Treasury bonds are all examples of financial contracts where a borrower agrees to repay borrowed amounts over time with interest; these bonds are issued by firms, cities, states, and the federal government respectively. Of them, Treasury bonds, issued by the U.S. Department of the Treasury, are often viewed as low-risk investments, but the same can't always be said for corporate bonds, especially junk bonds, which carry a higher risk of default.