Which of the following best explains 'performance bond'?
A) Written guarantee from a third-party guarantor.
B) Guarantee issued by the bank of the supplier.
C) Holding company secures payment for agreed sum in case business unit fails to make payments.
D) Business unit guarantees to pay holding company.

Question

Which of the following best explains 'performance bond'? 
A) Written guarantee from a third-party guarantor. 
B) Guarantee issued by the bank of the supplier. 
C) Holding company secures payment for agreed sum in case business unit fails to make payments. 
D) Business unit guarantees to pay holding company.

Quizplus · Accepted Answer

A performance bond is a written guarantee from a third-party guarantor (often an insurance company or a bank) that ensures that a project is completed according to the terms of the contract. If the vendor or contractor fails to meet the terms of the contract, the bond ensures that the project owner is compensated for any losses or damages incurred.

Which of the Following Best Explains 'Performance Bond