Validation of Stocks and Bonds

Business & Finance
Tutor: None Selected Time limit: 1 Day

What are the principal differences between stocks and bonds? What are the risks associated with investing in stocks and bonds? Which of these classes of securities is riskier? Explain.

Oct 3rd, 2015

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differences:

>Stock represent an ownership in corporation while bonds are long term debts  in which the issuing corporation promises to pay in due date.

>Stock are determined by mixture factors ,e,g earnings per share and also demand and supply, while bonds fluctuate primarily on interest rate.

>Stock are risky to invest in, bonds are less risky

>holders of stock can vote on company's certain issues, while bonds have no voting rights


Risks associated :

Interest risk- sudden rise in interest rates

Inflation risk-causes the dollar to weaken

market risk -declination in the market.

Timing risk- investment performing poorly after purchase or sale


Generally speaking, stocks carry more risk than bonds. This is because stocks can fluctuate dramatically for a wide variety of reasons, many of which may not be clear at all to the investor.


Please let me know if you need any clarification. I'm always happy to answer your questions.
Sep 16th, 2015

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Oct 3rd, 2015
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Oct 3rd, 2015
Dec 5th, 2016
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