Tuesday, April 11, 2017

Bonds vs. Stocks- 03/22/17

Bonds vs. Stocks- 03/22/17


Bonds:
-Loans or IOU’s that represent debt that the government or a corporation must repay to an investor
-The Bond holder has NO OWNERSHIP of the company

How are the values of bond determined?
-First, if a corporation issues then sells a bond, it’s liability for the corporation and asset for the buyer
-If nominal interest rate increases, bonds decrease

Stocks:
-Stock owners can profit in two ways
    1) Dividends: portions of a corporation’s profits are paid out to stockholders
        -As the profit increases, the dividend increases
    2) Capital gain: earned when a stockholder sells stock for more than what he/she paid for it
        -Capital loss: when a stockholder sells stock at a lower price than the purchase price


No comments:

Post a Comment