Which of the following describes a bond?

A bond is best described as a form of debt investment. When individuals or institutions purchase bonds, they are essentially lending money to the issuer of the bond, which could be a corporation or government entity. In return for this loan, the issuer agrees to pay back the principal amount on a specified maturity date and typically pay periodic interest payments, known as coupon payments, at predetermined intervals. This arrangement creates a predictable stream of income for the bondholder and characterizes the nature of a bond as a debt instrument rather than an equity investment.

In contrast, ownership stake in a business refers to equity investments, such as stocks, where investors gain partial ownership and profit from dividends and appreciation in value. Short-term cash assets typically include items like cash or cash equivalents that can be quickly converted to cash, not bonds which are generally medium to long-term investments. A stock trading strategy focuses on the buying and selling of stocks for potential profit, which is unrelated to the nature of bonds as debt instruments.