Final answer:
A bondholder can suffer a significant loss if a company issuing the bond fails to make payments due to bankruptcy, potentially only recovering a fraction of their investment.
Step-by-step explanation:
An example of when a bondholder can suffer a considerable loss is when a firm issues bonds and fails to make the promised interest payments or return the principal. If a firm goes bankrupt, bondholders can take the firm to court, requiring it to sell assets to repay them. However, if the firm's assets are not enough to cover the bonds, bondholders may only recoup a portion of their investment. This scenario is particularly risky with junk bonds or bonds from companies in poor financial health.