Fixed-rate bonds offer a set interest rate throughout the bond’s term, providing predictability but potentially lower returns if market rates rise. In contrast, variable-rate bonds have interest rates that adjust periodically. This adjustment makes them more responsive to changing market rates, offering the potential for higher returns if rates increase. Investors choosing between them should consider their risk tolerance and the prevailing interest rate environment, as fixed-rate bonds provide stability, while variable-rate bonds offer flexibility and the chance for greater income in rising-rate environments.