Which of the following is not true regarding bonds?
A)Bonds can be purchased from corporations as well as governments.
B)Interest must be paid to bondholders before dividends are paid to stockholders.
C)Bondholders face no risk from changing market interest rates on bonds that have a fixed interest rate.
D)The capital gains on bonds are generally more limited than the capital gains on stocks.

Question

Which of the following is not true regarding bonds?
A)​Bonds can be purchased from corporations as well as governments.
B)​Interest must be paid to bondholders before dividends are paid to stockholders.
C)​Bondholders face no risk from changing market interest rates on bonds that have a fixed interest rate.
D)​The capital gains on bonds are generally more limited than the capital gains on stocks.

Quizplus · Accepted Answer

Bondholders face interest rate risk, meaning that if market interest rates increase, the value of their fixed-rate bonds may decrease. This is because investors can purchase new bonds with higher interest rates, making lower interest rate bonds less valuable.

Which of the Following Is Not True Regarding Bonds