The figure given below shows the demand [D and D'] and supply [S and S'] curves of shares of stock.Figure 17.2

-Why are bonds less risky than stocks?

Question

The figure given below shows the demand [D and D'] and supply [S and S'] curves of shares of stock.Figure 17.2
 
-Why are bonds less risky than stocks?

Quizplus · Accepted Answer

Bonds are generally considered less risky than stocks because bondholders have a claim on the assets of the firm in case of bankruptcy or default. This means that bondholders have a higher likelihood of getting their investment back compared to shareholders, who are last in line to receive any remaining assets after the bondholders have been paid. Additionally, bonds usually have a fixed coupon rate, which makes them more predictable and less volatile than stocks, which can have fluctuating dividends and prices.

The Figure Given Below Shows the Demand [D and D']