U.S. History STAAR ( State of Texas Assessments of Academic Readiness) Practice Test

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Prepare for the U.S. History STAAR Exam with helpful flashcards and multiple-choice questions. Each question includes hints and explanations to boost your knowledge and confidence. Ace your exam!

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What is the primary purpose of a bond?

To provide a loan with no interest
To certify that one will pay the holder a sum of money plus interest
To guarantee a job position within the government
To fund public education initiatives

The correct answer is: To certify that one will pay the holder a sum of money plus interest

The primary purpose of a bond is to certify that one will pay the holder a sum of money plus interest. When an entity, such as a government or corporation, issues a bond, it is essentially borrowing money from the bondholder. In return, the issuer agrees to pay back the principal amount (the face value of the bond) on a specified maturity date, along with periodic interest payments over the life of the bond. This creates a contractual agreement that assures the bondholder they will receive their money back along with interest earned, making bonds a popular investment choice for those seeking stable returns. Other options do not accurately describe the function of a bond. A bond is not a loan with no interest; all bonds generally involve interest payments. It also does not guarantee a job position within the government, which is unrelated to financial instruments. While some bonds can be used to fund public initiatives like education, this is not their primary purpose; rather, they are mechanisms for raising capital through borrowing.