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Chapter 17: Q 12. (page 426)

What is a bond?

Short Answer

Expert verified

A financial instrument that constitutes a loan made by an investor to a debtor.

Step by step solution

01

Step 1. 

Bonds are of various types like zero interest rate bonds, perpetual bonds, inflation bonds, etc.

02

Step 2.

A bond is a financial instrument that constitutes a loan made by an investor to a debtor.

Bonds are used by firms or companies or municipalities etc. to finance projects. Owners of bonds are the creditors basically.

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Most popular questions from this chapter

How do bank failures cause the economy to go into

recession?

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a. What is the interest rate Ford is paying on the

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Explain how a company can fail when the

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Many retirement funds charge an administrative

fee each year equal to 0.25% on managed assets.

Suppose that Alexx and Spenser each invest $5,000 in the same stock this year. Alexx invests directly and earns 5% a year. Spenser uses a retirement fund and earns 4.75%. After 30 years, how much more will Alexx have than Spenser?
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