ECONOMICS (CBSE/UGC NET)

Detailed explanation-1: -An IOU is a written acknowledgement of debt that one party owes another. In business transactions, an IOU may be followed by a more formal written contract. The informality of the IOU can make it difficult to enforce, and usually impossible to sell or trade.

Detailed explanation-2: -A promissory note is a written promise from one person or business to pay another. Also known as loan agreements or IOUs, these documents lay out the terms and conditions of a loan and ensure that the agreement is legally enforceable.

Detailed explanation-3: -Bonds are technically a form of IOU, whereby an individual loans an amount of money to a company or government and is given a contract promising to repay the money with interest by a certain date. Whilst this agreement is sometimes referred to as an “IOU”, it is in fact legally binding.

Detailed explanation-4: -A promissory note is simply a form of debt-like a loan or an IOU-that a company may issue to raise money. An investor typically agrees to loan money to a company in exchange for the company’s promise that it will pay back the amount, plus interest, over a specific time period.