The correct option is C. an irredeemable bond. Explanation of the Correct Answer An irredeemable bond, also known as a consol bond, is a type of bond that pays interest indefinitely without the obligation to repay the principal (the capital) at any specific time. This means that the issuer of the bond will continue to pay interest to the bondholder for as long as the bond is in existence, but the original amount invested (the capital) is never returned. Key Characteristics of Irredeemable Bonds:

• Interest Payments: The bondholder receives regular interest payments, typically at a fixed rate.
• No Maturity Date: There is no set date for the repayment of the principal, which means the bond can theoretically last forever.
• Capital Unpaid: Since the principal is never repaid, the capital remains unpaid.

Why the Other Options Are Incorrect A. A development bond - Development bonds are typically issued for specific projects and may have a maturity date where the principal is repaid. They often do not fit the definition of a bond that only pays interest without repaying the capital. B. A long-term loan - A long-term loan usually involves both interest payments and the repayment of the principal over time. This means that the capital is not left unpaid; it is repaid according to the terms of the loan agreement. D. A redeemable bond - A redeemable bond is designed to be repaid at a specific maturity date. This means that the capital is returned to the bondholder at the end of the bond's term, which contradicts the question's requirement for a bond that leaves the capital unpaid. Summary of Key Points

• Irredeemable bonds pay interest indefinitely without repaying the principal.
• Development bonds and long-term loans involve capital repayment.
• Redeemable bonds have a maturity date for capital repayment.
• Understanding the characteristics of different financial instruments is crucial for identifying their functions and implications.

Revision Summary

• Irredeemable bonds pay interest forever without repaying the principal.
• Development bonds and long-term loans involve capital repayment.
• Redeemable bonds have a set maturity date for capital return.
• Familiarity with bond types helps in understanding their financial implications.