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    Investment in bonds and stocks

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    Following is a good comparison of stocks and bonds.

    Bond Common Stock

    Bondholders are creditors
    Stockholders are owners

    No voting rights exist
    Voting rights exist

    There is a maturity date
    There is no maturity date

    Bondholders have prior claims on profits and assets in bankruptcy
    Stockholders have residual claims on profits and assets in bankruptcy

    Interest payments represent fixed charges
    Dividend payments do not constitute fixed charges

    Interest payments are deductible on the tax return
    There is no tax deductibility for dividend payments

    The rate of return required by bondholders is typically lower than that required by stockholders
    The rate of return required by stockholders is typically greater than that required by bondholders

    What type of investor would benefit most from stocks? From bonds?

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    What type of investor would benefit most from stocks? From bonds?

    Investors who invest in bonds have a limited risk with a limited return, while Stockholders are risk takers who forgo security for higher potential return. People invest in bonds to have predictable interest ...

    Solution Summary

    Answers what type of investor would benefit most from stocks and the type that would benefit from bonds.

    $2.19

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