Bonds enjoy all but one of the following advantages.Which is it?
A)When interest rates drop,bond prices rise.
B)Bonds may be called when interest rates drop.
C)They reduce risk through diversification.
D)Bonds produce steady income.
E)They can be a safe investment if held to maturity.

Question

Quizplus · Accepted Answer

Bonds may be called when interest rates drop, which means the issuer can pay off the bond early, leaving the investor with the reinvestment risk of finding a new investment with a potentially lower interest rate. This is a disadvantage, not an advantage. The other options listed are all advantages of investing in bonds.

Bonds Enjoy All but One of the Following Advantages