1
QuizMultiple Choice

Investing and Financial Markets

Question 1 • Personal Finance - EL3403

Which statement best describes how an investor makes money off debt?

Answer
A
An investor makes money by issuing bonds.
A
An investor makes money by earning interest.
A
An investor makes money by raising capital.
A
An investor makes money by being repaid for the principal.

Explanation

When an investor lends money by buying debt such as a bond, the borrower typically pays interest as compensation for using the money. The principal is the original amount lent and is generally returned, rather than being the investor’s profit. Therefore, the best answer is earning interest.

AI-written and checked against the verified answer.

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