Economics Today and Tomorrow, Student Edition
Economics Today and Tomorrow, Student Edition
1st Edition
ISBN: 9780078747663
Author: McGraw-Hill
Publisher: Glencoe/McGraw-Hill School Pub Co
Question
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Chapter 6, Problem 13AA
To determine

To analyze: The main differences between a bond and a stock.

Expert Solution & Answer
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Explanation of Solution

In order to fund or extend its activities, stocks and bonds represent two separate ways for an organisation to raise capital.

A bond is a fixed income asset representing a loan made to a borrower by a lender. Bonds are units of debt issued and securitized as tradable assets by businesses. Bonds reflect debts. When a company or business issues a bond, it issues debt with the conformity of paying the interest for using the money.

Whereas, a stock is a general word used to describe a company's ownership certificate. Stocks are literally individual company shares. When a business issues stocks, it sells a piece of itself in return for cash.

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