Question

Describe the differences between bonds, installment notes, and mortgage notes?

Answer 1

Solution. Bonds are type of debt instrument to raise capital in any type of organization, issued by the lendor to the borrower who is required to pay a specific principal amount with interest at a future specified date. They are issued at a fixed interest rate and bond prices holds inverse relationship with interest rates. They are commonly known as fixed income securities.

Whereas, installment notes are kind of promissory note of obligation requiring the borrower to pay in installments or time intervals of the given minimum amounts of principal along with interest in series either equal monthly, quarterly, semi-anually, or anually.

Whereas, mortgage notes are kind of written promissory notes duly signed requiring to pay off the mortgage amount at the specified time along with interest and encompasses consequences of the failure to do so.