Why are bonds less risky than stocks?

Question

Quizplus · Accepted Answer

Bondholders have a claim on the assets of the firm which means that even if the company goes bankrupt, they will be paid before the shareholders. This makes bonds less risky than stocks. The other choices are incorrect as they do not necessarily make bonds less risky than stocks. For example, dividends on shares can vary and may be higher than the coupon rate on bonds, shares can also be issued by the government, and the profits of the firm do not necessarily affect the bondholders' return.

Why Are Bonds Less Risky Than Stocks