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When a Common Stock is Like a Bond

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When is a common stock like a bond?

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The solution discusses when a common stock is like a bond.

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The characteristics of a bond are that they pay regular payments in a fixed amount and return their full value at the end of a fixed period of time. If one were to find a stock that behaved in a similar way, it would be fair to say that common stock was like a bond. Normally, stock pays dividends based on how profitable the quarter or period was. However, there are many companies that pay out the same dividends regardless of how profitable the ...

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Robert Reinhart, MBA
Education
  • MBA, Merage School of Business, Univ of Cal, Irvine
  • BA, Univ of Cal, Irvine
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