how do bonds generate income for investors?○ bonds depreciate in value.○ bonds protect investors from…

how do bonds generate income for investors?○ bonds depreciate in value.○ bonds protect investors from bankruptcy.○ bonds pay interest to the bank that sold the bond.○ bonds pay a specified amount to the investor at maturity.

how do bonds generate income for investors?○ bonds depreciate in value.○ bonds protect investors from bankruptcy.○ bonds pay interest to the bank that sold the bond.○ bonds pay a specified amount to the investor at maturity.

Answer

Brief Explanations:

Bonds are debt instruments where investors lend money to issuers. The key income components are periodic interest payments (coupons) and the repayment of the face value at maturity. Let's analyze the options:

  1. Bond depreciation reduces investor value, it does not generate income.
  2. Bankruptcy protection is a risk mitigation feature, not an income source.
  3. Bonds pay interest to the investor, not the selling bank.
  4. Bonds repay the agreed face value (principal) to the investor at maturity, which is a core part of the income/return for bondholders, alongside periodic interest.

Answer:

D. Bonds pay a specified amount to the investor at maturity.