Meaning of bond (It is a paper certificate that is issued by the Government...)

[Svitlana_Morokhovych]

English Language Tests, Intermediate level

ESL/EFL Test #714 "Real Life: Banking (2)", question 3

A ......... is a guaranteed certificate of debt that is issued by the government; whereby, the issuing party promises to pay back the original amount of investment in addition to interest.

(a) link
(b) connection
(c) bond
(d) tie

English Language Tests, Intermediate level

ESL/EFL Test #714 "Real Life: Banking (2)", answer 3

A bond is a guaranteed certificate of debt that is issued by the government; whereby, the issuing party promises to pay back the original amount of investment in addition to interest.

Correct answer: (c) bond

Your answer was: incorrect
A link is a guaranteed certificate of debt that is issued by the government; whereby, the issuing party promises to pay back the original amount of investment in addition to interest.
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Hello,
I am sorry, but I don't understand the above statement. Would you mind to explain it in the different way?
Your tests are very helpful, Thank you very much!

[Kitosdad]

Good morning Svitlana, a bond is a paper certificate that is issued by the Government to a person who buys it.

The value of the bond is usually in 100/500/1000 pounds,dollars,euros. You can purchase one or more.

The attraction of the bond is that it pays a rate of interest higher than the usual bank rates, and it is guaranteed. Usually it is tax-free, and need not be declared in your annual tax return.This is a great way of " hiding" your wealth from the government. It is also transferable to another person should you wish to do so.

The bond is redeemable only at yearly intervals , that is if you want this higher rate of interest, otherwise earlier redemption will pay a lesser rate of interest.

Kitos.
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