Which Statement Best Describes How An Investor Makes Money Off Debt?
Answer :
A. An investor makes money by earning interest.
B. An investor makes money by being repaid for the principal.
C. An investor makes money by issuing bonds.
D. An investor makes money by raising capital.
Correct Answer: A. An investor makes money by earning interest.
An investor makes money by earning interest; this statement best describes how an investor profits from debt. When an investor buys debt securities like bonds issued by the government and firms, they lend money to the issuer, which pays them interest periodically. This extra money received in the form of interest generates income for the investor.
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