Which term best fits this description: A certificate issued by a government or private company which promises to pay back with interest the money borrowed from the buyer of the certificate.

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Study for the General Financial Literacy State Test. Prepare with flashcards and multiple-choice questions, each with hints and explanations. Enhance your financial expertise for success!

Multiple Choice

Which term best fits this description: A certificate issued by a government or private company which promises to pay back with interest the money borrowed from the buyer of the certificate.

Explanation:
A bond is a debt security where the issuer borrows money from investors and promises to pay periodic interest and to repay the principal at maturity. The description given—an issued certificate that promises to pay back the borrowed money with interest—describes exactly how bonds work. Real estate, collectibles, and commodities are asset categories representing property, items of value, or raw materials, but they are not debt obligations that commit to paying interest to lenders.

A bond is a debt security where the issuer borrows money from investors and promises to pay periodic interest and to repay the principal at maturity. The description given—an issued certificate that promises to pay back the borrowed money with interest—describes exactly how bonds work. Real estate, collectibles, and commodities are asset categories representing property, items of value, or raw materials, but they are not debt obligations that commit to paying interest to lenders.

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