Nate purchased an interest-bearing security last year, planning to hold it until maturity. He received interest payments, and, to his surprise, a sizable amount of the principal was paid back in the first year. This happened again in year 2. What type of security did Nate purchase?

Question

Business

Laney Brooks

7 August, 21:50

Nate purchased an interest-bearing security last year, planning to hold it until maturity. He received interest payments, and, to his surprise, a sizable amount of the principal was paid back in the first year. This happened again in year 2. What type of security did Nate purchase?

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Answers (2)

Know the Answer?

Jamari · Answer 1

asset-backed securtiy

Explanation:

Based on the scenario being described within the question it can be said that in this situation Nate seems to have purchased an asset-backed securtiy. This is a security that derives it's value and pre-defined pool of different assets which generate the income payments or interest payments that Nate seems to be receiving.

Chase · Answer 2

The type of security that Nate purchased is an asset backed security

Explanation:

Based on the illustration given in the question, Nate purchased an asset backed security.

An asset-backed security is a financial security such as a bond or note which is collateralized by a pool of assets such as loans, leases, credit card debt, royalties, or receivables.