How many parties are typically involved in a surety bond?

A surety bond typically involves three parties, which is why the choice of three is the correct answer. These three parties are the principal, the obligee, and the surety. The principal is the party that purchases the bond and is responsible for fulfilling a contractual obligation, such as completing a project or adhering to regulations. The obligee is the party that requires the bond to ensure that the principal fulfills their obligation. Finally, the surety is the entity that guarantees the performance of the principal, offering financial backing if the principal fails to meet their obligations. Understanding these roles and relationships is crucial for comprehending how surety bonds function in various contractual and financial settings.