Final answer:
Bonds carry risks such as the potential for default (option d) on payments and the possibility that increasing economy-wide interest rates make fixed-rate bond returns less attractive.
Step-by-step explanation:
Bonds are considered somewhat risky to invest in, even though they make predetermined payments based on a fixed rate of interest. This is because there is a risk of default on the bond payments, particularly in the case of high-yield or junk bonds that offer higher rates of return to compensate for this increased risk of default.
Additionally, if overall interest rates in the economy rise after an investor has purchased a bond with a fixed interest rate, the investor suffers a loss as their bond's rate becomes less attractive compared to new bonds issued at the higher prevailing rates. This risk is a part of the bond's yield, which is a measure of the bond's rate of return at the time of purchase, and includes compensation for delaying consumption, an adjustment for potential inflation, and a risk premium based on the borrower's financial stability.