A fixed-period loan with a set interest rate.

A fixed-period loan with a set interest rate.

• A. Bond
• B. Personal Loan
• C. Revolving Credit
• D. Mortgage

Answer: (A)

A bond is a debt instrument issued for a defined period that pays a fixed rate of interest, known as a coupon, during its life and returns the principal at maturity. This combination—a clear end date and predictable, fixed payments—best matches a fixed-period loan with a set interest rate. Personal loans can have fixed or variable rates but aren’t typically structured as market-traded securities with a guaranteed maturity and coupon. Revolving credit provides a flexible line of credit with no single fixed end date. Mortgages are loans secured by real estate and can have fixed or adjustable rates, but their defining feature in everyday use is the collateral and long-term nature rather than a standard fixed-period, fixed-rate security. So the instrument that best fits the description is the bond.

A bond is a debt instrument issued for a defined period that pays a fixed rate of interest, known as a coupon, during its life and returns the principal at maturity. This combination—a clear end date and predictable, fixed payments—best matches a fixed-period loan with a set interest rate. Personal loans can have fixed or variable rates but aren’t typically structured as market-traded securities with a guaranteed maturity and coupon. Revolving credit provides a flexible line of credit with no single fixed end date. Mortgages are loans secured by real estate and can have fixed or adjustable rates, but their defining feature in everyday use is the collateral and long-term nature rather than a standard fixed-period, fixed-rate security. So the instrument that best fits the description is the bond.