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    Stocks vs. Bonds

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    What is the difference between stocks and bonds? Which represents more risk to the company? Why?

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    A stock is a type of security that signifies ownership in a corporation and represents a claim on part of the corporation's assets and earnings.

    There are two main types of stock: common and preferred. Common stock usually entitles the owner to vote at shareholders' meetings and to receive dividends. Preferred stock generally does not have voting rights, but has a higher claim on assets and earnings than the common shares. For example, owners of preferred stock receive dividends before common shareholders and have priority in the event that a company goes bankrupt and is liquidated.

    They are also known as "shares" or "equity". A holder of stock (a shareholder) has a claim to a ...

    Solution Summary

    This response compares stocks and bonds and the risks associated to each.