Which term is a fixed-period loan with a set interest rate?

Which term is a fixed-period loan with a set interest rate?

• A. Mortgage
• B. Line of Credit
• C. Short-term Loan
• D. Bond

Answer: (D)

Understanding fixed-term debt with predetermined payments is what this item tests. A bond is a debt security issued for a specific period, known as its maturity, and it pays a fixed coupon rate over that period. Investors receive regular interest payments and get the principal back at the end of the term. This combination—defined期限 and set interest payments—is the hallmark of a bond. Mortgages can have fixed or adjustable rates but are loans secured by property and often involve amortization over many years. A line of credit is a revolving facility with no fixed repayment term and flexible borrowing. A short-term loan can be fixed or variable, but it doesn’t inherently embody the fixed-term, fixed-rate structure as clearly as bonds do. So the term that best fits a fixed-period loan with a set interest rate is bond.

Understanding fixed-term debt with predetermined payments is what this item tests. A bond is a debt security issued for a specific period, known as its maturity, and it pays a fixed coupon rate over that period. Investors receive regular interest payments and get the principal back at the end of the term. This combination—defined期限 and set interest payments—is the hallmark of a bond.

Mortgages can have fixed or adjustable rates but are loans secured by property and often involve amortization over many years. A line of credit is a revolving facility with no fixed repayment term and flexible borrowing. A short-term loan can be fixed or variable, but it doesn’t inherently embody the fixed-term, fixed-rate structure as clearly as bonds do.

So the term that best fits a fixed-period loan with a set interest rate is bond.