Which of the following statements best describes bonds?

Question

Quizplus · Accepted Answer

As the maturity date of a bond approaches, the uncertainty associated with the bond's cash flows decreases. As a result, the price of the bond will increase, approaching its par value. This is true regardless of the size of the company issuing the bond. Bonds are generally considered less risky than common stocks, so they typically have lower required returns. The yield on a bond is generally derived solely from interest payments, although changes in the price of the bond can affect the total return.

Which of the Following Statements Best Describes Bonds