Stocks, Bonds, and Other Fixed-Income Securities

 exchange-traded funds, municipal bonds, and other debt securities; common-stock and preferred-stock mutual funds; bonds, including Treasury and agency; and real estate investment trusts and exchange-traded funds. Investors must evaluate the risk associated with these instruments before investing.

Stocks are riskier than bonds, due in part to the risks associated with their fluctuating prices, but also because bonds are issued by governments, while stocks are issued by companies. Stocks are more volatile than bonds, but bonds are also generally considered riskier since there is an issuer backing them up that could go bankrupt at any moment.

Fixed-income securities, such as bonds, are very risky. They are specifically used to finance long-term investments, such as mortgages, car loans, and education loans.

Government and quasi-government debt securities. They are traded on the global capital and bond markets, but are most often traded on domestic exchanges; the most important of these is the U.S. Treasury markets, both primary and secondary. These markets are the primary way that investors in the United States access government and quasi-government debt securities. Government and quasi-government debt securities are available in market segments that are heavily regulated, such as investment-grade debt, bank debt, preferred stock, and emerging-market debt.

The risk of investing in government and quasi-government debt securities arises when the value of a debt security is sensitive to changes in interest rates.

Interest rate risk or market risk, Risk of reinvestment or Call or timing risk, The danger of yield-curve maturity, the risk of purchasing power inflation, Liquidity or marketability risk, Currency risk or exchange rate, Risk of volatility, Legal or political risk, and the risk of purchasing power inflation. Liquidity risk can be particularly high for certain asset classes, such as certain high-yield bonds, that are more illiquid. The risk of volatility refers to the risk that a security's price will fluctuate widely in response to news or trading conditions. Currency risk or exchange rate

Stocks are riskier than bonds, due in part to the risks associated with their fluctuating prices, but also because bonds are issued by governments, while stocks are issued by companies.

• Interest rate or market risk: The risk of investing in fixed-income securities is generally associated with the level of interest rates and the level of volatility in the markets. As interest rates rise, interest rate risk generally increases. • Risk of reinvestment: A possible loss of purchasing power due to inflation in the future. • Call or timing risk: The potential for investors to lose out should they choose to withdraw their money early.