Bonds are considered to offer a guaranteed return, as they must be honored by law, but which is still a potential risk that investors face?

A bond issuer is legally required to make the promised interest and principal payments, but that does not guarantee the issuer will have the money to do so. If the issuer goes bankrupt, investors may not receive all or any of what they are owed. Therefore, the potential risk is that the issuer could go bankrupt.

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