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BOND STOCK

BOND STOCK

FINANCIAL ACCOUNTING
FINANCIAL ACCOUNTING
10th Edition
ISBN:9781259964947
Author:Libby
Publisher:Libby
Chapter1: Financial Statements And Business Decisions
Section: Chapter Questions
Problem 1Q
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II. Read each statement carefully. Identify the following whether it is a "BOND" OR "STOCK". Check ( /) the appropriate box. BOND STOCK If a company has 10, 000 shares of stock outstanding and one person owns 1, 000 shares, that person would own and have claim to 10% of the company's assets and earnings. If current interest rates are 5% lower than your rate on a mortgage on which you have 4 years left to pay, it's going to matter much less than it would for someone who has 20 years of mortgage payments left. You might buy a 10 year, 10,000 bond paying 5% interest. The issuer,in exchange, will promise to pay you interest on that 7,500 every six months and then return your 10,000 after 10 years. A blue chip stocks are stocks issued by high quality, large companies and generally have steady dividend. 1. 2. 3. 4. 5. It offer an ownership stake in the company and considered riskier and more volatile.
Transcribed Image Text:II. Read each statement carefully. Identify the following whether it is a "BOND" OR "STOCK". Check ( /) the appropriate box. BOND STOCK If a company has 10, 000 shares of stock outstanding and one person owns 1, 000 shares, that person would own and have claim to 10% of the company's assets and earnings. If current interest rates are 5% lower than your rate on a mortgage on which you have 4 years left to pay, it's going to matter much less than it would for someone who has 20 years of mortgage payments left. You might buy a 10 year, 10,000 bond paying 5% interest. The issuer,in exchange, will promise to pay you interest on that 7,500 every six months and then return your 10,000 after 10 years. A blue chip stocks are stocks issued by high quality, large companies and generally have steady dividend. 1. 2. 3. 4. 5. It offer an ownership stake in the company and considered riskier and more volatile.
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