When a loan made to the government which provides a fixed amount of interest at the end of the period, then that is treated as a bond.
Option B is correct.
What is an interest?
An interest is a kind of charge being levied on the borrowed funds till its maturity. It can be based on monthly, yearly or quarterly depending upon the lender.
- A type of financial security that is being tradeable in the stock market is called a bond. It can be issued by the companies or even sometimes the government in the monetary market.
- The investors who acquire the bonds for certain period of time, usually five years, then those investors are called as bond investors or bondholders.
- When the term of bond ends, that is, the maturity period, then the bond investor gets the principal amounts along with interest. There are various categories of bonds issued with varying maturities and features.
Therefore, the description written in option B is correct.
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