Bonds Enjoy All but One of the Following Advantages

question 139

Multiple Choice

Bonds enjoy all but one of the following advantages.Which is it?

• A)When interest rates drop,bond prices rise.
• B)Bonds may be called when interest rates drop.
• C)They reduce risk through diversification.
• D)Bonds produce steady income.
• E)They can be a safe investment if held to maturity.

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Definitions:

Probability

A numerical expression between 0 and 1 that indicates how likely an event is to occur.

Property Loss

Property loss refers to the damage or destruction of property, leading to a financial loss to the owner or insured party.

Adverse Selection

This occurs when there is a lack of symmetric information prior to a deal, leading parties with higher risk to be more likely to engage in an agreement, notably impacting insurance and finance markets.

Reckless Drivers

Individuals who operate vehicles in a careless or heedless manner without regard for the rules of the road or the safety of others.