Investing in bonds offers the following advantages EXCEPT:

Investing in bonds offers the following advantages EXCEPT:

• A. It provides a steady income stream
• B. It enables the investor an opportunity for capital appreciation
• C. It offers lower risk compared to stocks
• D. It diversifies the investment portfolio

Answer: (B)

Investing in bonds indeed provides several distinct advantages, one of which is offering a steady income stream. When you invest in bonds, you typically receive regular interest payments, which can be predictable and consistent, making them a reliable source of income for investors. Additionally, bonds are considered to have lower risk compared to stocks. This characteristic attracts risk-averse investors who seek to preserve their capital while earning interest over time. Bonds are often seen as a safer investment, especially government bonds, which are backed by the government's promise to pay. Bonds also play a critical role in diversifying an investment portfolio. By including bonds alongside stocks and other asset classes, investors can mitigate risk and reduce the volatility of their overall investment portfolio. The exception is that investing in bonds does not inherently provide capital appreciation. While it is true that the market value of bonds can fluctuate and there may be instances where an investor realizes gains from selling a bond at a higher price than they paid, this is not a guaranteed advantage of bond investment. Capital appreciation is more typically associated with stocks, where share values can increase significantly over time. Hence, the notion of capital appreciation is not typically regarded as a primary benefit of investing in bonds.

Investing in bonds indeed provides several distinct advantages, one of which is offering a steady income stream. When you invest in bonds, you typically receive regular interest payments, which can be predictable and consistent, making them a reliable source of income for investors.

Additionally, bonds are considered to have lower risk compared to stocks. This characteristic attracts risk-averse investors who seek to preserve their capital while earning interest over time. Bonds are often seen as a safer investment, especially government bonds, which are backed by the government's promise to pay.

Bonds also play a critical role in diversifying an investment portfolio. By including bonds alongside stocks and other asset classes, investors can mitigate risk and reduce the volatility of their overall investment portfolio.

The exception is that investing in bonds does not inherently provide capital appreciation. While it is true that the market value of bonds can fluctuate and there may be instances where an investor realizes gains from selling a bond at a higher price than they paid, this is not a guaranteed advantage of bond investment. Capital appreciation is more typically associated with stocks, where share values can increase significantly over time. Hence, the notion of capital appreciation is not typically regarded as a primary benefit of investing in bonds.