K Why are shares considered to be a riskier investment than bonds? O A. Share prices reflect future expected profits, while bonds reflect past known profits. OB. Shares can decline in value over time, but bond prices are fixed at the time the bonds are sold. C. Companies are obligated to pay bondholders before shareholders and must do so whether or not profits are earned. D. All of the above. Given that shares are riskier than bonds, why do investors invest in equity? OA. The ownership rights that equities convey provide psychic returns to investors. OB. The greater risk is offset by the prospect of greater average returns. OC. Most investors are risk loving rather than risk averse. OD. Existing bonds are generally more difficult to sell than existing equities. 4