(I)A bond is a debt security that promises to make payments periodically for a specified period of time.
(II)A stock is a security that is a claim on the earnings and assets of a corporation.
A) (I) is true, (II) false.
B) (I) is false, (II) true.
C) Both are true.
D) Both are false.

Question

Quizplus · Accepted Answer

Both statements are accurate descriptions of what a bond and a stock are. A bond represents a loan made by an investor to a borrower, and the borrower (usually a corporation or government) promises to pay back the investor the principal plus interest over a specified amount of time. A stock, on the other hand, represents a piece of ownership in a corporation, and the value of that stock depends on the company's earnings and assets.

(I)A Bond Is a Debt Security That Promises to Make