Category: General Knowledge | Last updated: 2026-09-18

When you buy a stock, you become a part-owner of the company. What does buying a bond primarily represent?

A) Becoming a part-owner of the issuing entity.
B) Lending money to the issuing entity in exchange for interest payments.
C) A direct investment in real estate.
D) Purchasing an insurance policy against market downturns.

Explanation

A bond is essentially a loan made by an investor to a borrower (typically a corporation or government). In return for the loan, the borrower promises to pay interest over a specified period and repay the principal amount at maturity.

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