Which characteristic is true for both bonds and stocks?

The characteristic that is true for both bonds and stocks is that both are subject to investor risk.

Bonds, which are debt securities, carry the risk of default by the issuer, meaning there's a possibility that the issuer may fail to make scheduled interest payments or return the principal. Additionally, bonds can be affected by interest rate fluctuations; when rates rise, bond prices typically fall, exposing investors to potential market risk.

Stocks represent ownership in a company and come with the risk that the company's performance may not yield a profit, leading to a decline in stock prices. Shareholders also face the risk of losing their entire investment if the company goes bankrupt.

Both investment types carry inherent risks, meaning that while they have the potential for returns, there is no guarantee of returns, and investors could incur losses. This shared characteristic highlights the uncertain nature of investing in financial markets.