Bonds are less risky than stocks because a company legally must pay what it owes to lenders before it can distribute profits to stockholders.

Question

Quizplus · Accepted Answer

This statement is true. Bonds are considered less risky than stocks because bondholders have priority for repayment before stockholders. If a company goes bankrupt, bondholders are more likely to get their invested money back before stockholders receive any funds.

Bonds Are Less Risky Than Stocks Because a Company Legally