Question

Nate purchased an​ interest-bearing security last​ year, planning to hold it until maturity. He received interest​ payments, and, to his​ surprise, a sizable amount of the principal was paid back in the first year. This happened again in year 2. What type of security did Nate​ purchase?

Answer 1

Answer:

The type of security that Nate purchased is  an asset backed security

Explanation:

Based on the illustration given in the question, Nate purchased an asset backed security.  

An asset-backed security  is a financial security such as a bond or note which is collateralized by a pool of assets such as loans, leases, credit card debt, royalties, or receivables.  

Answer 2

Answer:

asset-backed securtiy

Explanation:

Based on the scenario being described within the question it can be said that in this situation Nate seems to have purchased an asset-backed securtiy. This is a security that derives it's value and pre-defined pool of different assets which generate the income payments or interest payments that Nate seems to be receiving.