ECONOMICS
MONEY
|
Question
[CLICK ON ANY CHOICE TO KNOW THE RIGHT ANSWER]
|
|
|
You will pay very high taxes.
|
|
|
You may lose money.
|
|
|
You have to receive dividends.
|
|
|
You must participate in investor meetings.
|
Detailed explanation-1: -In general, stocks are riskier than bonds, simply due to the fact that they offer no guaranteed returns to the investor, unlike bonds, which offer fairly reliable returns through coupon payments.
Detailed explanation-2: -Some of the disadvantages of bonds include interest rate fluctuations, market volatility, lower returns, and change in the issuer’s financial stability. The price of bonds is inversely proportional to the interest rate. If bond prices increase, interest rates decrease and vice-versa.
Detailed explanation-3: -Investment Products All have higher risks and potentially higher returns than savings products. Over many decades, the investment that has provided the highest average rate of return has been stocks. But there are no guarantees of profits when you buy stock, which makes stock one of the most risky investments.
Detailed explanation-4: -Costs. Stock purchases typically involve commissions and fees, which can consume a large portion of your investment. Volatility. Stock prices can fluctuate dramatically over short periods, sometimes within just minutes or hours. Lack of control. Information risk. Liquidity risk. Counterparty risk. 05-Oct-2022
Detailed explanation-5: -Interest Rate Risk Diversification. Since the price of a bond changes as with the changes in the market interest rates, the risks that an investor gets to face is that the price of a bond will drop in case the market interest rates rise. Credit Risk. Liquidity Risk. Inflation Risk.