Bonds are offering a guaranteed return which must be honored by law but the there is still a risk that investors faces which is the issuer could go bankrupt.
Option A is correct.
Who is investor?
Investor is a person who acquires the securities from the stock market either at face value or at premium. They have invested their money with a motive of getting returns in near future. The investor got dividends on the stocks being acquired up to the number of shares held by them.
The bonds are one of the trading security that provides a fixed interest after a certain period of time called maturity. The investors who are acquiring or selling the bonds are known as bondholders or bond investors. The investors can be bankrupted when they are not able to pay off the amount as needed. In that case, they have to sold the assets in order to fulfilled the obligation being arise.
Question's missing part:
The given options are provided as follows:
A) The issuer could go bankrupt.
B) The issuer could refuse to pay dividends.
C) The issuer may not raise enough capital.
D) The issuer may not make a profit.
Therefore, the explanation written in option A is correct.
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