What term refers to a certificate issued by a government or private entity promising to repay borrowed money with interest?

What term refers to a certificate issued by a government or private entity promising to repay borrowed money with interest?

• A. Savings
• B. Credit Worthiness
• C. Mutual Fund
• D. Bonds

Answer: (D)

Bonds are debt instruments: they are certificates a government or company issues to borrow money from investors, with a promise to repay the principal plus interest at a set date. Investors receive periodic interest payments (coupons) and get the face value back at maturity. This description matches the idea of borrowing money and paying it back with interest. Savings is money set aside and earns interest, not a formal promise to repay borrowed funds. Creditworthiness is an assessment of how likely a borrower is to repay. A mutual fund is a pooled investment vehicle, not a certificate of debt.

Bonds are debt instruments: they are certificates a government or company issues to borrow money from investors, with a promise to repay the principal plus interest at a set date. Investors receive periodic interest payments (coupons) and get the face value back at maturity. This description matches the idea of borrowing money and paying it back with interest.

Savings is money set aside and earns interest, not a formal promise to repay borrowed funds. Creditworthiness is an assessment of how likely a borrower is to repay. A mutual fund is a pooled investment vehicle, not a certificate of debt.