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

Chapter8: Analysis Of Risk And Return

Section: Chapter Questions

Problem 18QTD

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Choose the correct statement about different types of financial markets: a. Capital market is the market for short-term government and corporate debt securities b. None of these c. Money market is market for long-term financial instruments d. Stock market is the market where participants can issue and trade stocks
In what major ways do stocks differ from bonds? When would bonds be a better investment choice than common stock?
Role of the component of the financial system is very important to ensure smooth flow of funds and financial system stability. Financial markets are mechanisms where those requiring finance (deficit units) can get connected with those able to supply it (surplus units) a) Critically evaluate the role of the components of the financial system. b) What are some of the characteristics associated with dividends paid on common stock? c) In what major ways do stocks differ from bonds?
Which of the following is a difference between stocks and bonds? Select one: a. cash flows to bondholders are not known and not promised, cash flows to stockholders are known and promised b. companies issue stocks to grow the company and issue debt to pay bills c. required returns on debt are typically lower than required returns on equity d. dividends are legal obligations of the firm; coupons are not. Clear my choice
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
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?
Why might a firm prefer to finance its investments with bonds rather than stocks? Alternatively, why might a firm prefer stocks to bonds?
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?
Which of the following is NOT a purpose of valuing financial securities? a. Valuation is used to provide sensible financial decisions.b. Valuation is used to get the intrinsic value of a financial security.c. Valuation is helpful for investors in order to determine whether to buy or sell their securitiesd. Valuation is used to predict the exact prices of financial securities.

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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