{"id":165310,"date":"2024-11-11T18:45:00","date_gmt":"2024-11-11T18:45:00","guid":{"rendered":"https:\/\/learnexams.com\/blog\/?p=165310"},"modified":"2024-11-11T18:45:05","modified_gmt":"2024-11-11T18:45:05","slug":"certificates-of-debt-which-carry-a-promise-to-buy-them-back-at-a-higher-price-are-called","status":"publish","type":"post","link":"https:\/\/www.learnexams.com\/blog\/2024\/11\/11\/certificates-of-debt-which-carry-a-promise-to-buy-them-back-at-a-higher-price-are-called\/","title":{"rendered":"Certificates of debt which carry a promise to buy them back at a higher price are called"},"content":{"rendered":"\n

Certificates of debt which carry a promise to buy them back at a higher price are called _<\/strong>. a) Stocks b) Bonds c) Derivatives d) Commodities<\/p>\n\n\n\n

The Correct Answer and Explanation is:<\/mark><\/strong><\/p>\n\n\n\n

The correct answer is b) Bonds<\/strong>.<\/p>\n\n\n\n

Explanation:<\/h3>\n\n\n\n

Bonds are a form of debt security that allows entities, such as governments or corporations, to raise funds by borrowing money from investors. When an investor buys a bond, they are essentially lending money to the issuer of the bond (such as a government or corporation) for a specified period. In return, the bond issuer promises to repay the face value of the bond (also known as the principal) on a predetermined date known as the maturity date. Additionally, bonds typically come with a promise to pay periodic interest to the bondholder throughout the life of the bond, providing a steady income stream for the investor.<\/p>\n\n\n\n

This interest payment, or coupon rate, compensates the bondholder for lending their money and for the risk associated with the loan. Bonds are typically issued with a fixed interest rate, meaning the bondholder receives the same amount of interest at regular intervals until the bond matures. However, some bonds may have variable rates, where the interest payment adjusts according to market interest rates.<\/p>\n\n\n\n

When bonds are repaid at a higher price than the initial purchase price, it reflects both the principal amount and accumulated interest, making bonds appealing for conservative investors seeking low-risk, predictable returns. Unlike stocks (option a), bonds do not represent ownership in a company, but rather a debt obligation. Derivatives (option c) are financial instruments whose value is derived from an underlying asset, while commodities (option d) are physical goods like gold, oil, or wheat.<\/p>\n\n\n\n

Bonds are popular in investment portfolios due to their relatively lower risk compared to stocks and are widely used by governments to finance infrastructure and other long-term projects. Corporations may issue bonds to fund expansion or new projects, which can provide stable financing without diluting ownership. Overall, bonds offer an effective way to balance risk and return in an investment strategy, offering security for conservative investors and a clear repayment structure based on the issuer’s promise.<\/p>\n","protected":false},"excerpt":{"rendered":"

Certificates of debt which carry a promise to buy them back at a higher price are called _. a) Stocks b) Bonds c) Derivatives d) Commodities The Correct Answer and Explanation is: The correct answer is b) Bonds. Explanation: Bonds are a form of debt security that allows entities, such as governments or corporations, to […]<\/p>\n","protected":false},"author":1,"featured_media":0,"comment_status":"closed","ping_status":"closed","sticky":false,"template":"","format":"standard","meta":{"site-sidebar-layout":"default","site-content-layout":"","ast-site-content-layout":"default","site-content-style":"default","site-sidebar-style":"default","ast-global-header-display":"","ast-banner-title-visibility":"","ast-main-header-display":"","ast-hfb-above-header-display":"","ast-hfb-below-header-display":"","ast-hfb-mobile-header-display":"","site-post-title":"","ast-breadcrumbs-content":"","ast-featured-img":"","footer-sml-layout":"","ast-disable-related-posts":"","theme-transparent-header-meta":"","adv-header-id-meta":"","stick-header-meta":"","header-above-stick-meta":"","header-main-stick-meta":"","header-below-stick-meta":"","astra-migrate-meta-layouts":"default","ast-page-background-enabled":"default","ast-page-background-meta":{"desktop":{"background-color":"","background-image":"","background-repeat":"repeat","background-position":"center center","background-size":"auto","background-attachment":"scroll","background-type":"","background-media":"","overlay-type":"","overlay-color":"","overlay-opacity":"","overlay-gradient":""},"tablet":{"background-color":"","background-image":"","background-repeat":"repeat","background-position":"center center","background-size":"auto","background-attachment":"scroll","background-type":"","background-media":"","overlay-type":"","overlay-color":"","overlay-opacity":"","overlay-gradient":""},"mobile":{"background-color":"","background-image":"","background-repeat":"repeat","background-position":"center center","background-size":"auto","background-attachment":"scroll","background-type":"","background-media":"","overlay-type":"","overlay-color":"","overlay-opacity":"","overlay-gradient":""}},"ast-content-background-meta":{"desktop":{"background-color":"var(--ast-global-color-5)","background-image":"","background-repeat":"repeat","background-position":"center center","background-size":"auto","background-attachment":"scroll","background-type":"","background-media":"","overlay-type":"","overlay-color":"","overlay-opacity":"","overlay-gradient":""},"tablet":{"background-color":"var(--ast-global-color-5)","background-image":"","background-repeat":"repeat","background-position":"center center","background-size":"auto","background-attachment":"scroll","background-type":"","background-media":"","overlay-type":"","overlay-color":"","overlay-opacity":"","overlay-gradient":""},"mobile":{"background-color":"var(--ast-global-color-5)","background-image":"","background-repeat":"repeat","background-position":"center center","background-size":"auto","background-attachment":"scroll","background-type":"","background-media":"","overlay-type":"","overlay-color":"","overlay-opacity":"","overlay-gradient":""}},"footnotes":""},"categories":[25],"tags":[],"class_list":["post-165310","post","type-post","status-publish","format-standard","hentry","category-exams-certification"],"_links":{"self":[{"href":"https:\/\/www.learnexams.com\/blog\/wp-json\/wp\/v2\/posts\/165310","targetHints":{"allow":["GET"]}}],"collection":[{"href":"https:\/\/www.learnexams.com\/blog\/wp-json\/wp\/v2\/posts"}],"about":[{"href":"https:\/\/www.learnexams.com\/blog\/wp-json\/wp\/v2\/types\/post"}],"author":[{"embeddable":true,"href":"https:\/\/www.learnexams.com\/blog\/wp-json\/wp\/v2\/users\/1"}],"replies":[{"embeddable":true,"href":"https:\/\/www.learnexams.com\/blog\/wp-json\/wp\/v2\/comments?post=165310"}],"version-history":[{"count":0,"href":"https:\/\/www.learnexams.com\/blog\/wp-json\/wp\/v2\/posts\/165310\/revisions"}],"wp:attachment":[{"href":"https:\/\/www.learnexams.com\/blog\/wp-json\/wp\/v2\/media?parent=165310"}],"wp:term":[{"taxonomy":"category","embeddable":true,"href":"https:\/\/www.learnexams.com\/blog\/wp-json\/wp\/v2\/categories?post=165310"},{"taxonomy":"post_tag","embeddable":true,"href":"https:\/\/www.learnexams.com\/blog\/wp-json\/wp\/v2\/tags?post=165310"}],"curies":[{"name":"wp","href":"https:\/\/api.w.org\/{rel}","templated":true}]}}