A bond is a debt security, essentially a promise from the issuer (such as a corporation or government) to pay back the principal amount borrowed plus interest to the bondholder. It does not provide ownership rights like stocks (choice A) and it does not share in profits like dividends (choice B). Bonds are also not a promise of ownership of the government (choice D).

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A Bond Is

Question 58

Multiple Choice

A bond is

A) a claim on the assets of the corporation that gives the purchaser an ownership right in the corporation.
B) the share of profits distributed to bondholders.
C) a promise to pay for the use of someone else's money.
D) a promise of ownership of the government.
E) c and d

Correct Answer: