Question

Which of these statements is false?

(A) The bond market is larger than the stock market.
(B) Bonds are more important capital sources than stocks for companies and governments.
(C) Some bonds offer high potential for rewards and, consequently, higher risk.
(D) Bonds are always less risky than stocks.

Answer 1

The false statement is letter "D": Bonds are always less risky than stocks.

Step-by-step explanation:

A bond is a unit of debt issued by a company to the bondholder and considered tradeable security. A bond has a fixed return since it is paid at a fixed rate. The price of the bond is inversely correlated with the interest rate: when the rate goes up the bond price fall and when the rate falls the bond price goes up. Even if bonds are less risky than stocks, they are not always less risky than stocks.