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

A.  An investor makes money by issuing bonds.

B.  An investor makes money by earning interest.

C.  An investor makes money by raising capital.

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

 

The correct answer is (B). An investor makes money by earning interest.

Explanation

An investor makes money by earning interest, which is the cost of borrowing money or the return on an investment. When an investor lends money to a borrower, such as through bonds or savings accounts, they receive interest payments as compensation for the use of their funds. Similarly, when an investor deposits money in a bank, they earn interest on their savings over time. This interest can accumulate, leading to increased returns on their initial investment, allowing investors to grow their wealth over time.

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