Investors purchase bonds because

Question

Quizplus · Accepted Answer

Investors purchase bonds because they pay interest income. Bonds are a fixed income investment in which an investor loans money to an entity (usually a corporation or government) at a fixed interest rate for a specified period of time. The interest payments are made to the bondholder until the bond reaches maturity, at which point the investor's principal is returned. Bonds are not risk-free, but they are generally considered less risky than stocks because they offer a fixed income stream and have a defined maturity date. Bonds may also be purchased for diversification purposes or to balance out a portfolio. The returns for stocks may be higher than bonds, but the volatility and risk associated with stocks is also greater.

Investors Purchase Bonds Because