An IOU that promises to pay a certain amount at maturity,and also to pay periodic fixed amounts until that date,is called a(n)
A) stock.
B) equity.
C) bond.
D) futures contract.

Question

Quizplus · Accepted Answer

A bond is a fixed-income investment that works like an IOU. The bond issuer promises to pay the bondholder a certain amount of money (the face value or principal) at maturity, and also agrees to make regular interest payments (the coupon rate) until the bond matures. Stocks represent ownership in a company, equity refers to ownership value in a business or property, and futures contracts are agreements to buy or sell assets at a future date at a predetermined price. These do not match the characteristics of an IOU that promises fixed payments and a specific payout at maturity.

An IOU That Promises to Pay a Certain Amount at Maturity,and