The primary function of a government bond, such as the one Alex purchases with a fixed interest rate, is as a store of value. A government bond allows investors to preserve their capital while earning interest over time, making it a safe investment option. While it also plays a role as a unit of account (by having a specific value) and can be a medium of exchange in secondary markets, its main function for investors is to store value and provide a return.
Profit motiveMedium of ExchangeUnit of AccountStore of Value
QUESTION 3/4
Alex purchases a government bond with a fixed interest rate. What is the primary function of this bond?
1 answer