What are bonds typically described as?

Bonds are typically described as instruments that represent a loan made by an investor to a borrower, often a corporation or government. They are essentially a form of debt. When you purchase a bond, you are lending money to the issuer, who promises to pay you back at a later date, usually with interest. This aligns closely with the description of them as "paper which you cash in later," as bondholders can redeem them at maturity for their face value, often receiving periodic interest payments until that time.

The other options do not accurately capture the nature of bonds. Bonds are not debts that must be repaid immediately; they have set maturity dates. They also do not represent ownership in a company, which would be a characteristic of stocks, nor do they guarantee high returns, as returns from bonds can vary and depend on interest rates and credit risk. Understanding this helps clarify the role of bonds in finance and investment portfolios.