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Similarities and Differences of Stock and Bonds

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How are stocks and bonds similar and different? How are they used in the corporate world? Describe the possible forms a return could be earned on bonds, common stock and preferred stock.

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Solution Summary

Your discussion is 262 words and explains how bonds and stock differ and how the investors get a return from each.

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Contrast the differences/similarities of common stocks and bonds. Explain how they would be used in the corporate environment.

Bonds are loans that firms get from public/investors. The firm issuing the bond gets the funds and pays interest during the life of the bond and the bond face amount at maturity. The investors pay for the bond and enjoy the interest payments as long as they hold the bonds. Investors can buy and sell with each other. In rare cases, the firm buys back the ...

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Carol Sargent, PhD
Education
  • BSc, University of Virginia
  • MSc, University of Virginia
  • PhD, Georgia State University
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