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Stocks and Bond Questions

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1.What is the difference between stocks and bonds?
2.Which represents more risk to the company? Why?
3.Does a company receive money when its stock is traded in the secondary market?
4.How does the company affect the price of its stock?
5.Why is a company concerned about its stock price in the secondary market?

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Solution Summary

Answers the questions with 25-100+ words each:
1.What is the difference between stocks and bonds?
2.Which represents more risk to the company? Why?
3.Does a company receive money when its stock is traded in the secondary market?
4.How does the company affect the price of its stock?
5.Why is a company concerned about its stock price in the secondary market?

Solution Preview

1.What is the difference between stocks and bonds?
The major differences between stocks and bonds how and why they are used. A company uses bonds to borrow money from creditors; it uses stocks to sell ownership to investors. The types of accounts differ as well. Bonds are a liability while stocks are equity. The compensation method for bonds is fixed interest payments on specific dates and stocks have no guarantee to the amount or date or timing of dividends. Lastly, bonds have a set retirement date (such as 5, 10 or 20 years) while stocks are perpetual and may be held onto indefinitely. ...

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