Question

What are bonds?

1) Pay a fixed interest rate over a specified period of time
2) A consistently low risk investment choice
3) Rated according to risk from a third party
4) Are insured by the federal government

Answer 1

Bonds are financial contracts through which a borrower agrees to repay the amount that it borrowed. Corporate bonds, municipal bonds, state bonds, and Treasury bonds are common types of bonds.

Step-by-step explanation:

Bonds are financial contracts through which a borrower agrees to repay the amount that it borrowed. A bond specifies an amount that one will borrow, the amounts that one will repay over time based on the interest rate when the bond is issued, and the time until repayment. Corporate bonds are issued by firms; municipal bonds are issued by cities, state bonds by U.S. states, and Treasury bonds by the federal government through the U.S. Department of the Treasury.