Why are bond returns expected to be lower than stock returns?
The return on bonds is expected to be lower than for stocks because there is less risk involved in bonds. A stock's value has a greater potential to fluctuate wildly with the whims of the market. Therefore, it has the potential to pay out high dividends and returns. However, this volatility comes with a larger degree of risk and uncertainty.
The potential for return from bonds is typically lower than from stocks because bonds have a lower risk associated with them. Bonds are typically issued by stable entities, such as governments and well-established corporations. They pay out fixed dividends on a regular schedule. Because there is not much risk involved, the return for bonds is relatively tempered. Another risk-mitigating measure comes from the fact that corporations are usually...
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