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Category - Economics

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Bonds are IOUs or certificates of debts between lenders and borrowers. The following are characteristics of bonds EXCEPT:
  1. term
  2. profit margin
  3. credit risk
  4. tax treatment
Explanation
Answer: B - Profit margin is not a characteristic of bonds.

Key Takeaway: Bonds have a number of characteristics such as term or the length of time until they mature. They also carry a credit risk which is the chance that the borrower will fail to pay a portion of the principal or interest. Bonds also have unique tax laws that govern how much tax is collected on the interest.
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