Final answer:
The benefit of buying bonds is that they generally possess lower volatility compared to stocks, providing more stability in an investment portfolio. Bonds provide interest payments, but they do not guarantee principal repayment and typically offer lower returns than stocks.
Step-by-step explanation:
One benefit of buying bonds is that they rise and fall less dramatically than stocks. This is an attractive feature to investors seeking more stability in their investment portfolio. While no investment is without risk, bonds are generally considered to be less volatile than stocks and therefore offer a more predictable stream of returns over time. Bonds do provide interest payments to investors, which can be seen as a form of passive income. However, unlike option 'a', interest payments are not always monthly; they can be semi-annual or at other intervals.
Regarding option 'b', it is not accurate to say that bonds guarantee repayment of the principal. While bonds are intended to repay principal at maturity, there is always a risk of default, particularly with corporate or high-yield bonds. As for the comparison of rates of return with stocks (option 'd'), stocks historically offer a higher long-term return potential than bonds due to equity ownership in companies, albeit with higher risk.
Therefore, the correct answer is 'c. bonds rise and fall less dramatically than stocks.' which underscores the general principle of lower volatility associated with bond investments compared to stocks.