Which instrument requires the issuer to pay a set annual rate of interest and to repay the borrowed sum on a specified date?

• A. Bond
• B. Note
• C. Stock
• D. Debenture

Answer: (A)

In debt financing, the issuer commits to two things: paying a fixed rate of interest and returning the principal at a specified date. A bond fits this description precisely: it is a long‑term debt security with a stated coupon (set annual or periodic interest) and a defined maturity date when the face value is repaid.

A note can also carry interest and have a payoff at a date, but it is typically shorter-term than a bond. Stock represents equity ownership and does not promise fixed interest or guaranteed principal repayment, so it doesn’t fit. A debenture is a type of unsecured debt, which is bond‑like, but the broad term that best captures the described features is bond.