A debt instrument represents
A)an ownership claim by the purchaser on the issuer.
B)a promise by a borrower to repay principal plus interest to a lender.
C)an attempt by a borrower in default to restore his or her credit.
D)a nontaxable asset, owned primarily by large corporations.

Question

Quizplus · Accepted Answer

A debt instrument is a financial asset that represents a promise from a borrower to repay principal plus interest to a lender. It does not represent ownership in the issuer, nor is it an attempt to restore credit. It is also not necessarily nontaxable or owned primarily by large corporations.

A Debt Instrument Represents