Correct answer with Explanation (General Finance) What is the main difference between stocks andbonds? a) Stocks represent ownership, while bondsrepresent debt b) Stocks are always riskier thanbonds c) Bonds always provide higher returns thanstocks d) Stocks are issued by governments, whilebonds are issued by companies

Explanation of Stocks:Stocks represent ownership in a company. When you purchase a stock, you become…

Answered: What is the main difference between…

EBK CONTEMPORARY FINANCIAL MANAGEMENT

14th Edition

ISBN:9781337514835

Author:MOYER

Publisher:MOYER

Chapter7: Common Stock: Characteristics, Valuation, And Issuance

Section: Chapter Questions

Problem 6QTD

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Which of the following are money market instruments? Check all that apply. Common stocks Commercial paper Corporate bonds Treasury bills Preferred stocks A financial instrument whose value is derived from the value of an underlying asset is called a (Speculation, hedge, derivative)
The cash flows associated with common stock are more difficult to estimate than those related to bonds because stock has a residual claim against the company versus a contractual obligation for a bond. Group of answer choices True False
In detail
How do stocks and bonds differ in terms of the future payments that they are expected to make? Which type of investment (stocks or bonds) is considered to be more risky? Given what you know, which investment (stocks or bonds) do you think commonly goes by the nickname “fixed income”?
Both stock and bond returns are based on the cash flows generated by the issuing firm. How do shareholders and bondholders differ in their claimof the firm’s cash flows? How doessuch claim difference cause the risk difference between stocks and bonds?
Capital markets are markets for short-term debt securities. True False
If bonds payable are not callable, the issuing corporation a.can exchange them for common stock b.can repurchase them in the open market c.is more likely to repurchase them if the interest rates increase d.must get special permission from the SEC to repurchase them
Is preferred stock comparable to long-term debt in any way? Is it comparable to equity in any way?
what is meant by “The money market is necessary but not sufficient for the liquidity of securities on the stock market”
explain the differences between equity capital and debt capital. which category would stocks fall under?
1. Types of bonds Fixed-income securities consist of debt instruments and preferred stock. Bonds are debt securities in which a borrower promises to pay a specified interest rate and principal at a future date. A. Which of the following statements about Treasury bonds is the most accurate? Treasury bonds have a very small amount of default risk, so they are not completely riskless. Treasury bonds are completely riskless. Treasury bonds are not completely riskless, since their prices will decline when interest rates rise. B. Based on the information given in the following statement, answer the questions that follow: In July 2009, Hungary successfully issued 1 billion euros in bonds. The transaction was managed by Citigroup. Who is the issuer of the bonds? The Hungarian government Hungary Bank Citigroup C. What type of bonds are these? Municipal bonds Corporate bonds Government bonds
These are corporate bonds that have a higher rate of return with a higher level of risk? Group of answer choices Revenue bonds Junk bonds GOBs Tax increment bonds

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What is the main difference between stocks and bonds? a) Stocks represent ownership, while bonds represent debt b) Stocks are always riskier than bonds c) Bonds always provide higher returns than stocks d) Stocks are issued by governments, while bonds are issued by companies