Question

Bond loan is a source of —

• A. Long-term loan
• B. Medium-term loan
• C. Short-term loan
• D. None of these

Hint:

Bond loans provide long-term funds and are a major source of capital for governments and corporations.

Answer 1

The Correct Option is A

Step 1: Understanding Bond Loan.
A bond loan is a type of debt instrument issued by companies or governments to raise funds from the public or financial institutions.
The borrower (issuer) agrees to pay periodic interest and repay the principal after a specific period.
Step 2: Nature of bond loans.
Bonds generally have long maturities — typically 5 years or more — which makes them a source of long-term finance.
They are used to fund large-scale projects, infrastructure, and capital expansion.
Step 3: Analysis of options.
- (1) Long-term loan: Correct — bonds are issued for longer durations.
- (2) Medium-term loan: Incorrect — applies to 1–5 year borrowings.
- (3) Short-term loan: Incorrect — includes loans like commercial papers.
- (4) None of these: Incorrect.
Step 4: Conclusion.
Thus, bond loans are a source of long-term finance.