Investors holding debt instruments are primarily interested in a fixed rate of return on their investment regardless of the profitability of the company.

Question

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Investors holding debt instruments such as bonds, notes, or loans expect to receive a fixed rate of return on their investment, usually in the form of interest payments. However, the level of profitability of the company issuing the debt may affect its ability to make those payments. Therefore, investors in debt instruments are also concerned about the creditworthiness and financial stability of the issuer.

Investors Holding Debt Instruments Are Primarily Interested in a Fixed