The difference between the Stock and the Bond.

Question

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Answer 1

Question

Chapter 26, Problem 1CQQ

To determine

The difference between the Stock and the Bond.

Expert Solution & Answer

Answer to Problem 1CQQ

Option 'd' is correct.

Explanation of Solution

Both the Stocks and the Bonds are the financial market instruments used by the people in the economy. Amongst them, the share provides the ownership right to those who holds them whereas the Bond is an income investment which is fixed and thus it acts as a certificate of indebtedness. There are many matches between the Stocks and the Bonds. Both of them are financial instruments, used to raise capital to the firm, traded on exchange and both entail risks.

Option (d):

The stock makes the holder of the stock to be a shareholder of the firm which issues the stock. This means the stock holder holds the ownership share of the firm and thus, the stock provides the share of the firm's profit to the stock holder. The Bond on the other hand is a certificate of indebtedness which guarantees the repayment of the loan amount when the bond matures and it provides interest to the loan issuer by the taking firms. Here, individual J offered one-third of the profit of the firm which means Jerry is a stock holder whereas the individual George who receives interest for the amount provided is a bond holder. Thus, option 'd' is correct.

Option (a):

The stock makes the holder of the stock to be a shareholder of the firm and it provides the share of the firm's profit to its holder whereas the Bond is a certificate of indebtedness which guarantees the repayment of the loan amount after the maturity period of the bond. Here, Elaine is the issuer of Bond and stock to George and Jerry because he takes the money from both of them to create capital and start the business. Here, George receives interest and jerry receives share of profit. So George is the Bond holder and Jerry is the stockholder. Since, Elaine is not amongst the two groups, option 'a' is incorrect.

Option (b):

The stock makes the holder of the stock to be a shareholder of the firm and it provides the share of the firm's profit to its holder whereas the Bond is a certificate of indebtedness which guarantees the repayment of the loan amount after the maturity period of the bond.

Here, George receives interest which is received on the Bonds and Jerry receives share of profit which is by the stock. Thus, they are Bond holders and stock holders respectively. Since the option explains them inversely, option 'b' is incorrect.

Option (c):

The stock provides share of profit to the holder of the stock and thus, Jerry who receives the profit share of the firm is a stockholder. But Elaine is the individual who issues the Bonds and stocks in order to raise the capital need for the firm and thus he is neither a bondholder nor a stockholder. Since option explains Elaine as a Bondholder, option 'c' is incorrect.

Economics Concept Introduction

Concept introduction:

Stock: A stock means a partial ownership of the firm. The stocks are the shares are sold to the people in order to raise the capital for the firm. Thus, those who owns stocks owns the share of the ownership of the firm.

Bond: It is the certificate of indebtedness of the bond issuer to the holder. So, it is a fixed income investment in which an investor loans capital to an entity for a period of time at variable interest rates.

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Students have asked these similar questions

Erin buys a bond that pays no coupon payments for $160. When the bond matures, she receives $200. Erin earned an interest rate of ____________ percent on this bond. (Enter your answer "as a percent, but without the percentage sign." If you think Erin earned 99.99 percent interest, enter only 99.99 in the blank.)

"Knowing how to secure your financial well-being is one of the most important things you'll ever need in life. You don't have to be a genius to do it. You just need to know a few basics, form a plan, and be ready to stick to it. No matter how much or little money you have, the important thing is to educate yourself about your opportunities. At the SEC [Securities and Exchange Commission], we enforce the laws that determine how investments are offered and sold to you. These laws protect investors, but you need to do your part, too. No one can guarantee that you'll make money from investments you make." Use the excerpt from the SEC's Guide to Saving and Investing to answer the following. Be sure to write in complete sentences. Explain different types of investments and savings accounts and how they help your money grow over time. Describe the importance of government agencies, like the SEC, in protecting your investments.

Bond A pays $8,000 in 20 years. Bond B pays $8,000 in 40 years. (To keep things simple, assume these are zero-coupon bonds, which means the $8,000 is the only payment the bondholder receives.) a. If the interest rate is 3.5 percent, what is the value of each bond today? Which bond is worth more? Why? (Hint: You can use a calculator, but the rule of 70 should make the calculation easy.) b. If the interest rate increases to 7 percent, what is the value of each bond? Which bond has a larger percentage change in value? c. Based on the example above, complete the two blanks in this sentence: "The value of a bond [rises/falls] when the interest rate increases, and bonds with a longer time to maturity are [more/less] sensitive to changes in the interest rate.

Answer 2

Question

Chapter 26, Problem 1CQQ

To determine

The difference between the Stock and the Bond.

Expert Solution & Answer

Answer to Problem 1CQQ

Option 'd' is correct.

Explanation of Solution

Both the Stocks and the Bonds are the financial market instruments used by the people in the economy. Amongst them, the share provides the ownership right to those who holds them whereas the Bond is an income investment which is fixed and thus it acts as a certificate of indebtedness. There are many matches between the Stocks and the Bonds. Both of them are financial instruments, used to raise capital to the firm, traded on exchange and both entail risks.

Option (d):

The stock makes the holder of the stock to be a shareholder of the firm which issues the stock. This means the stock holder holds the ownership share of the firm and thus, the stock provides the share of the firm's profit to the stock holder. The Bond on the other hand is a certificate of indebtedness which guarantees the repayment of the loan amount when the bond matures and it provides interest to the loan issuer by the taking firms. Here, individual J offered one-third of the profit of the firm which means Jerry is a stock holder whereas the individual George who receives interest for the amount provided is a bond holder. Thus, option 'd' is correct.

Option (a):

The stock makes the holder of the stock to be a shareholder of the firm and it provides the share of the firm's profit to its holder whereas the Bond is a certificate of indebtedness which guarantees the repayment of the loan amount after the maturity period of the bond. Here, Elaine is the issuer of Bond and stock to George and Jerry because he takes the money from both of them to create capital and start the business. Here, George receives interest and jerry receives share of profit. So George is the Bond holder and Jerry is the stockholder. Since, Elaine is not amongst the two groups, option 'a' is incorrect.

Option (b):

The stock makes the holder of the stock to be a shareholder of the firm and it provides the share of the firm's profit to its holder whereas the Bond is a certificate of indebtedness which guarantees the repayment of the loan amount after the maturity period of the bond.

Here, George receives interest which is received on the Bonds and Jerry receives share of profit which is by the stock. Thus, they are Bond holders and stock holders respectively. Since the option explains them inversely, option 'b' is incorrect.

Option (c):

The stock provides share of profit to the holder of the stock and thus, Jerry who receives the profit share of the firm is a stockholder. But Elaine is the individual who issues the Bonds and stocks in order to raise the capital need for the firm and thus he is neither a bondholder nor a stockholder. Since option explains Elaine as a Bondholder, option 'c' is incorrect.

Economics Concept Introduction

Concept introduction:

Stock: A stock means a partial ownership of the firm. The stocks are the shares are sold to the people in order to raise the capital for the firm. Thus, those who owns stocks owns the share of the ownership of the firm.

Bond: It is the certificate of indebtedness of the bond issuer to the holder. So, it is a fixed income investment in which an investor loans capital to an entity for a period of time at variable interest rates.

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Answer 3

Question

Chapter 26, Problem 1CQQ

To determine

The difference between the Stock and the Bond.

Expert Solution & Answer

Answer to Problem 1CQQ

Option 'd' is correct.

Explanation of Solution

Both the Stocks and the Bonds are the financial market instruments used by the people in the economy. Amongst them, the share provides the ownership right to those who holds them whereas the Bond is an income investment which is fixed and thus it acts as a certificate of indebtedness. There are many matches between the Stocks and the Bonds. Both of them are financial instruments, used to raise capital to the firm, traded on exchange and both entail risks.

Option (d):

The stock makes the holder of the stock to be a shareholder of the firm which issues the stock. This means the stock holder holds the ownership share of the firm and thus, the stock provides the share of the firm's profit to the stock holder. The Bond on the other hand is a certificate of indebtedness which guarantees the repayment of the loan amount when the bond matures and it provides interest to the loan issuer by the taking firms. Here, individual J offered one-third of the profit of the firm which means Jerry is a stock holder whereas the individual George who receives interest for the amount provided is a bond holder. Thus, option 'd' is correct.

Option (a):

The stock makes the holder of the stock to be a shareholder of the firm and it provides the share of the firm's profit to its holder whereas the Bond is a certificate of indebtedness which guarantees the repayment of the loan amount after the maturity period of the bond. Here, Elaine is the issuer of Bond and stock to George and Jerry because he takes the money from both of them to create capital and start the business. Here, George receives interest and jerry receives share of profit. So George is the Bond holder and Jerry is the stockholder. Since, Elaine is not amongst the two groups, option 'a' is incorrect.

Option (b):

The stock makes the holder of the stock to be a shareholder of the firm and it provides the share of the firm's profit to its holder whereas the Bond is a certificate of indebtedness which guarantees the repayment of the loan amount after the maturity period of the bond.

Here, George receives interest which is received on the Bonds and Jerry receives share of profit which is by the stock. Thus, they are Bond holders and stock holders respectively. Since the option explains them inversely, option 'b' is incorrect.

Option (c):

The stock provides share of profit to the holder of the stock and thus, Jerry who receives the profit share of the firm is a stockholder. But Elaine is the individual who issues the Bonds and stocks in order to raise the capital need for the firm and thus he is neither a bondholder nor a stockholder. Since option explains Elaine as a Bondholder, option 'c' is incorrect.

Economics Concept Introduction

Concept introduction:

Stock: A stock means a partial ownership of the firm. The stocks are the shares are sold to the people in order to raise the capital for the firm. Thus, those who owns stocks owns the share of the ownership of the firm.

Bond: It is the certificate of indebtedness of the bond issuer to the holder. So, it is a fixed income investment in which an investor loans capital to an entity for a period of time at variable interest rates.

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Answer 4

Question

Chapter 26, Problem 1CQQ

To determine

The difference between the Stock and the Bond.

Expert Solution & Answer

Answer to Problem 1CQQ

Option 'd' is correct.

Explanation of Solution

Both the Stocks and the Bonds are the financial market instruments used by the people in the economy. Amongst them, the share provides the ownership right to those who holds them whereas the Bond is an income investment which is fixed and thus it acts as a certificate of indebtedness. There are many matches between the Stocks and the Bonds. Both of them are financial instruments, used to raise capital to the firm, traded on exchange and both entail risks.

Option (d):

The stock makes the holder of the stock to be a shareholder of the firm which issues the stock. This means the stock holder holds the ownership share of the firm and thus, the stock provides the share of the firm's profit to the stock holder. The Bond on the other hand is a certificate of indebtedness which guarantees the repayment of the loan amount when the bond matures and it provides interest to the loan issuer by the taking firms. Here, individual J offered one-third of the profit of the firm which means Jerry is a stock holder whereas the individual George who receives interest for the amount provided is a bond holder. Thus, option 'd' is correct.

Option (a):

The stock makes the holder of the stock to be a shareholder of the firm and it provides the share of the firm's profit to its holder whereas the Bond is a certificate of indebtedness which guarantees the repayment of the loan amount after the maturity period of the bond. Here, Elaine is the issuer of Bond and stock to George and Jerry because he takes the money from both of them to create capital and start the business. Here, George receives interest and jerry receives share of profit. So George is the Bond holder and Jerry is the stockholder. Since, Elaine is not amongst the two groups, option 'a' is incorrect.

Option (b):

The stock makes the holder of the stock to be a shareholder of the firm and it provides the share of the firm's profit to its holder whereas the Bond is a certificate of indebtedness which guarantees the repayment of the loan amount after the maturity period of the bond.

Here, George receives interest which is received on the Bonds and Jerry receives share of profit which is by the stock. Thus, they are Bond holders and stock holders respectively. Since the option explains them inversely, option 'b' is incorrect.

Option (c):

The stock provides share of profit to the holder of the stock and thus, Jerry who receives the profit share of the firm is a stockholder. But Elaine is the individual who issues the Bonds and stocks in order to raise the capital need for the firm and thus he is neither a bondholder nor a stockholder. Since option explains Elaine as a Bondholder, option 'c' is incorrect.

Economics Concept Introduction

Concept introduction:

Stock: A stock means a partial ownership of the firm. The stocks are the shares are sold to the people in order to raise the capital for the firm. Thus, those who owns stocks owns the share of the ownership of the firm.

Bond: It is the certificate of indebtedness of the bond issuer to the holder. So, it is a fixed income investment in which an investor loans capital to an entity for a period of time at variable interest rates.

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Answer 5

Chapter 26, Problem 1CQQ

To determine

The difference between the Stock and the Bond.

Expert Solution & Answer

Answer to Problem 1CQQ

Option 'd' is correct.

Explanation of Solution

Both the Stocks and the Bonds are the financial market instruments used by the people in the economy. Amongst them, the share provides the ownership right to those who holds them whereas the Bond is an income investment which is fixed and thus it acts as a certificate of indebtedness. There are many matches between the Stocks and the Bonds. Both of them are financial instruments, used to raise capital to the firm, traded on exchange and both entail risks.

Option (d):

The stock makes the holder of the stock to be a shareholder of the firm which issues the stock. This means the stock holder holds the ownership share of the firm and thus, the stock provides the share of the firm's profit to the stock holder. The Bond on the other hand is a certificate of indebtedness which guarantees the repayment of the loan amount when the bond matures and it provides interest to the loan issuer by the taking firms. Here, individual J offered one-third of the profit of the firm which means Jerry is a stock holder whereas the individual George who receives interest for the amount provided is a bond holder. Thus, option 'd' is correct.

Option (a):

The stock makes the holder of the stock to be a shareholder of the firm and it provides the share of the firm's profit to its holder whereas the Bond is a certificate of indebtedness which guarantees the repayment of the loan amount after the maturity period of the bond. Here, Elaine is the issuer of Bond and stock to George and Jerry because he takes the money from both of them to create capital and start the business. Here, George receives interest and jerry receives share of profit. So George is the Bond holder and Jerry is the stockholder. Since, Elaine is not amongst the two groups, option 'a' is incorrect.

Option (b):

The stock makes the holder of the stock to be a shareholder of the firm and it provides the share of the firm's profit to its holder whereas the Bond is a certificate of indebtedness which guarantees the repayment of the loan amount after the maturity period of the bond.

Here, George receives interest which is received on the Bonds and Jerry receives share of profit which is by the stock. Thus, they are Bond holders and stock holders respectively. Since the option explains them inversely, option 'b' is incorrect.

Option (c):

The stock provides share of profit to the holder of the stock and thus, Jerry who receives the profit share of the firm is a stockholder. But Elaine is the individual who issues the Bonds and stocks in order to raise the capital need for the firm and thus he is neither a bondholder nor a stockholder. Since option explains Elaine as a Bondholder, option 'c' is incorrect.

Economics Concept Introduction

Concept introduction:

Stock: A stock means a partial ownership of the firm. The stocks are the shares are sold to the people in order to raise the capital for the firm. Thus, those who owns stocks owns the share of the ownership of the firm.

Bond: It is the certificate of indebtedness of the bond issuer to the holder. So, it is a fixed income investment in which an investor loans capital to an entity for a period of time at variable interest rates.

Answer 6

Chapter 26, Problem 1CQQ

To determine

The difference between the Stock and the Bond.

Expert Solution & Answer

Answer to Problem 1CQQ

Option 'd' is correct.

Explanation of Solution

Both the Stocks and the Bonds are the financial market instruments used by the people in the economy. Amongst them, the share provides the ownership right to those who holds them whereas the Bond is an income investment which is fixed and thus it acts as a certificate of indebtedness. There are many matches between the Stocks and the Bonds. Both of them are financial instruments, used to raise capital to the firm, traded on exchange and both entail risks.

Option (d):

The stock makes the holder of the stock to be a shareholder of the firm which issues the stock. This means the stock holder holds the ownership share of the firm and thus, the stock provides the share of the firm's profit to the stock holder. The Bond on the other hand is a certificate of indebtedness which guarantees the repayment of the loan amount when the bond matures and it provides interest to the loan issuer by the taking firms. Here, individual J offered one-third of the profit of the firm which means Jerry is a stock holder whereas the individual George who receives interest for the amount provided is a bond holder. Thus, option 'd' is correct.

Option (a):

The stock makes the holder of the stock to be a shareholder of the firm and it provides the share of the firm's profit to its holder whereas the Bond is a certificate of indebtedness which guarantees the repayment of the loan amount after the maturity period of the bond. Here, Elaine is the issuer of Bond and stock to George and Jerry because he takes the money from both of them to create capital and start the business. Here, George receives interest and jerry receives share of profit. So George is the Bond holder and Jerry is the stockholder. Since, Elaine is not amongst the two groups, option 'a' is incorrect.

Option (b):

The stock makes the holder of the stock to be a shareholder of the firm and it provides the share of the firm's profit to its holder whereas the Bond is a certificate of indebtedness which guarantees the repayment of the loan amount after the maturity period of the bond.

Here, George receives interest which is received on the Bonds and Jerry receives share of profit which is by the stock. Thus, they are Bond holders and stock holders respectively. Since the option explains them inversely, option 'b' is incorrect.

Option (c):

The stock provides share of profit to the holder of the stock and thus, Jerry who receives the profit share of the firm is a stockholder. But Elaine is the individual who issues the Bonds and stocks in order to raise the capital need for the firm and thus he is neither a bondholder nor a stockholder. Since option explains Elaine as a Bondholder, option 'c' is incorrect.

Economics Concept Introduction

Concept introduction:

Stock: A stock means a partial ownership of the firm. The stocks are the shares are sold to the people in order to raise the capital for the firm. Thus, those who owns stocks owns the share of the ownership of the firm.

Bond: It is the certificate of indebtedness of the bond issuer to the holder. So, it is a fixed income investment in which an investor loans capital to an entity for a period of time at variable interest rates.

Answer 7

Chapter 26, Problem 1CQQ

To determine

The difference between the Stock and the Bond.

Answer 8

Expert Solution & Answer

Answer to Problem 1CQQ

Option 'd' is correct.

Answer 9

Expert Solution & Answer

Answer 10

Expert Solution & Answer

Answer 11

Explanation of Solution

Both the Stocks and the Bonds are the financial market instruments used by the people in the economy. Amongst them, the share provides the ownership right to those who holds them whereas the Bond is an income investment which is fixed and thus it acts as a certificate of indebtedness. There are many matches between the Stocks and the Bonds. Both of them are financial instruments, used to raise capital to the firm, traded on exchange and both entail risks.

Option (d):

The stock makes the holder of the stock to be a shareholder of the firm which issues the stock. This means the stock holder holds the ownership share of the firm and thus, the stock provides the share of the firm's profit to the stock holder. The Bond on the other hand is a certificate of indebtedness which guarantees the repayment of the loan amount when the bond matures and it provides interest to the loan issuer by the taking firms. Here, individual J offered one-third of the profit of the firm which means Jerry is a stock holder whereas the individual George who receives interest for the amount provided is a bond holder. Thus, option 'd' is correct.

Option (a):

The stock makes the holder of the stock to be a shareholder of the firm and it provides the share of the firm's profit to its holder whereas the Bond is a certificate of indebtedness which guarantees the repayment of the loan amount after the maturity period of the bond. Here, Elaine is the issuer of Bond and stock to George and Jerry because he takes the money from both of them to create capital and start the business. Here, George receives interest and jerry receives share of profit. So George is the Bond holder and Jerry is the stockholder. Since, Elaine is not amongst the two groups, option 'a' is incorrect.

Option (b):

The stock makes the holder of the stock to be a shareholder of the firm and it provides the share of the firm's profit to its holder whereas the Bond is a certificate of indebtedness which guarantees the repayment of the loan amount after the maturity period of the bond.

Here, George receives interest which is received on the Bonds and Jerry receives share of profit which is by the stock. Thus, they are Bond holders and stock holders respectively. Since the option explains them inversely, option 'b' is incorrect.

Option (c):

The stock provides share of profit to the holder of the stock and thus, Jerry who receives the profit share of the firm is a stockholder. But Elaine is the individual who issues the Bonds and stocks in order to raise the capital need for the firm and thus he is neither a bondholder nor a stockholder. Since option explains Elaine as a Bondholder, option 'c' is incorrect.

Answer 12

Economics Concept Introduction

Concept introduction:

Stock: A stock means a partial ownership of the firm. The stocks are the shares are sold to the people in order to raise the capital for the firm. Thus, those who owns stocks owns the share of the ownership of the firm.

Bond: It is the certificate of indebtedness of the bond issuer to the holder. So, it is a fixed income investment in which an investor loans capital to an entity for a period of time at variable interest rates.

Answer 13

Ch. 26.1 - Prob. 1QQ Ch. 26.2 - Prob. 2QQ Ch. 26.3 - Prob. 3QQ Ch. 26 - Prob. 1CQQ Ch. 26 - Prob. 2CQQ Ch. 26 - Prob. 3CQQ Ch. 26 - Prob. 4CQQ Ch. 26 - Prob. 5CQQ Ch. 26 - Prob. 6CQQ Ch. 26 - Prob. 1QR

The difference between the Stock and the Bond.

The difference between the Stock and the Bond.

Answer to Problem 1CQQ

Explanation of Solution

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Chapter 26 Solutions