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

A. Stocks are stable and do not change often.

B. A bond typically pays a fixed, predictable amount of interest each year.

C. Bonds are issued by many different entities.

D. Well-established company stocks pay dividends to their investors.

Question

Business

Dillan Winters

24 August, 14:08

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

A. Stocks are stable and do not change often.

B. A bond typically pays a fixed, predictable amount of interest each year.

C. Bonds are issued by many different entities.

D. Well-established company stocks pay dividends to their investors.

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Answers (1)

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Azul Cohen · Answer 1

The reason why a high-quality bond typically considered a lower-risk investment than a stock is: B. A bond typically pays a fixed, predictable amount of interest each year.

Meanwhile, the value of a stock is very volatile depended on the condition of the market. The constant changing of prospect make investing in stocks became a very risky move because you could lose a huge amount of capital in a very short period of time.