Question

Why is a high-quality bond typically considered a lower-risk investment than a stock?

A. Bonds are issued by many different entities .
B. Well-established company stocks pay dividends to their investors.
C. A bond typically pays a fixed, predictable amount of interest each year.
D. Stocks are stable and do not change often.

Answer 1

Why is a high-quality bond typically considered a lower-risk investment than a stock? A bond typically pays a fixed, predictable amount of interest each year. Since a bond is a fixed income investment it commonly stays more low-risk over a stock. A stock can fluctuate when there are changes in the company they have purchased stocks through has good or bad months on the market.