Final answer:
Bonds are somewhat risky to buy due to varying rates of return and the potential for losses if interest rates rise after purchase.
Step-by-step explanation:
A bond is a fixed income security that promises the investor a series of payments based on a fixed rate of interest. However, bonds are somewhat risky to buy due to several factors.
First, the riskiness of the borrower affects the rate of return that a bond offers. Bonds issued by borrowers with a higher chance of defaulting on payments, known as high-yield or junk bonds, offer higher rates of return but are also riskier.
Second, if interest rates rise for the economy as a whole after an investor has purchased a fixed-rate bond, they are locked into receiving lower interest payments than the current market rate. This can result in a loss for the investor.