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Which Statement Best Describes How An Investor Makes Money Off Debt?

Brief :


A. An investor makes money by being repaid for the principal.

B. An investor makes money by issuing bonds.

C. An investor makes money by earning interest.

D. An investor makes money by raising capital.

Correct Answer:  C

C  is the Correct Statement Which Best Describes How An Investor Makes Money Off Debt.

Explanation: The best way to describe how an investor makes money off debt is through interest payments. When investors buy debt instruments like bonds, they lend money to the issuer, who pays them interest periodically. These interest payments generate income for the investor. Additionally, investors can also profit by selling these debt instruments if their market value increases.

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