Bob expects to retire in a few years and his primary goal is to avoid major losses in his 401-K account.Which of the following bond characteristics should he be seeking?
I.Long maturities
II.High ratings
III High yields
IV.Short maturities

Question

Quizplus · Accepted Answer

Bob's primary goal is to avoid major losses, which means he needs to prioritize safety over higher returns. Therefore, he should focus on bonds with high ratings, which indicates a lower risk of default. Shorter maturities also offer less risk because the bond will mature sooner, reducing the potential impact of interest rate fluctuations. High yields and long maturities come with higher risk, which would not align with Bob's goal of avoiding major losses.

Bob Expects to Retire in a Few Years and His