4
lesson pretestMultiple Choice

Pretest

Question 4 • CMS 2026-2027 Economics and Personal Finance CREDIT RECOVERY

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.

Explanation

When an investor lends money by buying debt such as a bond, the borrower pays interest as compensation for using the money. The principal is the original amount lent and is generally repaid, not the investor’s earnings. Therefore, the best answer is earning interest.

AI-written and checked against the verified answer.

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