Investing in bonds offers which of the following advantages?

Investing in bonds provides advantages primarily due to their structured nature and the terms stipulating the return of principal at maturity. When an investor purchases a bond, they are essentially lending money to the issuer (which could be a government or a corporation) in exchange for interest payments over a specified period. This creates a reliable and predictable income stream, known as coupon payments, which can be attractive for investors seeking certainty in their earnings.

The principal amount, which is the initial investment, is typically returned in full at the end of the bond's term, assuming no default occurs. This characteristic stands out as it offers a level of protection for the investor's initial investment, making bonds a generally safer investment compared to stocks, where the principal can fluctuate dramatically in value.

In addition to steady income and principal protection, bonds can be relatively less volatile than equities, contributing to a more stable investment environment, especially in uncertain market conditions or economic downturns. Therefore, the reliable income and protection of principal highlight the fundamental advantages of bond investing.