Which of the following is a formal pledge (an IOU)obligating the issuer to pay interest periodically and repay the principal at maturity (a preset future date)to the lender?
A) Commercial bank loan
B) Corporate bond
C) Mutual fund
D) Bond indenture
E) Prospectus

Question

Quizplus · Accepted Answer

A corporate bond is a formal pledge obligating the issuer to pay interest periodically and repay the principal at maturity to the lender. It is a type of debt security issued by a corporation to raise funds for various purposes, such as expanding operations or making acquisitions. Commercial bank loans are also a form of debt, but they do not involve the issuance of securities. Mutual funds are investment vehicles that pool money from multiple investors to invest in securities. A bond indenture is a legal contract between the issuer and the bondholders that spells out the terms of the bond, but it is not itself a formal pledge to pay. A prospectus is a document that provides information about a security offering, but it is not a type of security itself.

Which of the Following Is a Formal Pledge (An IOU)obligating