A passage with three blanks is given below, followed by options containing a single word. Choose the one word that can correctly fill all the three blanks. In finance, a ________ is an instrument of indebtedness of the issuer to the holders. The ________ is a debt security under which the issuer owes the holders a debt and is obliged to pay them interest (the coupon) or to repay the principal at a later date, termed the maturity date. Thus, a ________ is a form of loan or IOU.

Introduction / Context:
This passage tests your understanding of basic financial terminology. You are given a definition of a financial instrument described as an instrument of indebtedness, a debt security that pays interest and repays principal at maturity. A single word must fit all three blanks without changing the intended meaning. Recognising standard finance vocabulary is essential to solving this type of question.

Given Data / Assumptions:

• The instrument represents indebtedness of an issuer to holders.
• It is a debt security, not ownership of the company.
• The issuer pays interest (coupon) and repays principal at maturity.
• The instrument can often be traded in a secondary market.
• The options are: Brand, Stock, Bond, Barter.

Concept / Approach:
In finance, a "bond" is exactly a debt instrument issued by governments, companies or other entities. A bondholder lends money to the issuer, who promises to pay regular interest and return the principal on a specified date. "Stock" instead represents ownership (equity) in a company, not a debt. "Brand" relates to marketing identity, and "barter" is the direct exchange of goods and services without money. Therefore, "bond" is the only word that fits the technical description in every occurrence.

Step-by-Step Solution:
Step 1: Insert "bond" into the first blank: "In finance, a bond is an instrument of indebtedness of the issuer to the holders." This exactly matches textbook definitions.Step 2: Insert "bond" into the second blank: "The bond is a debt security under which the issuer owes the holders a debt and is obliged to pay them interest or to repay the principal at maturity." This again is accurate financial language.Step 3: Insert "bond" into the third blank: "Thus, a bond is a form of loan or IOU." This is a standard way of explaining bonds to beginners.Step 4: Test "stock" in the blanks. A stock is not primarily described as an instrument of indebtedness but as a share of ownership, so the definition would become wrong.Step 5: Test "brand" and "barter". Neither can be reasonably described as a debt security paying coupons and principal, so they fail immediately.

Verification / Alternative check:
If you know basic differences between financial instruments, you can double check. A bondholder is a creditor; a shareholder (stockholder) is an owner. Only the creditor relationship involves fixed interest and contractual repayment of principal at maturity. The passage clearly describes a creditor relationship, not an ownership claim, so "bond" is the only fitting term. The final sentence, calling the instrument a form of loan or IOU, further confirms this, as that phrase is commonly used when teaching about bonds.

Why Other Options Are Wrong:
"Brand" is about corporate identity, logos and names, and has nothing to do with debt or repayment. "Stock" would imply variable dividends and ownership rights rather than fixed coupons and a maturity date, so it misrepresents the described instrument. "Barter" is a system of exchange without money, unrelated to formal debt securities. None of them can replace "bond" without contradicting core parts of the passage.

Common Pitfalls:
Students who are not comfortable with financial terms may confuse "bond" and "stock" because both are commonly traded in markets. The key is to remember that bonds usually involve fixed interest and repayment dates, while stocks represent ownership and do not have a maturity date. Keeping this distinction in mind helps with many finance related questions.

Final Answer:
The single word that correctly completes all three blanks is Bond, so option C is correct.