BANKING GENERAL KNOWLEDGE
|
Question
[CLICK ON ANY CHOICE TO KNOW THE RIGHT ANSWER]
|
|
|
stocks represent a share of the ownership of a corporation; bonds represent a debt incurred by the firm that it generally repays with interest
|
|
|
bonds usually mature within 20 years or less; the maturity date of stocks generally occurs anywhere from 25 to 40 years.
|
|
|
should the corporation go bankrupt, the claims of stockholders come before those of bondholders
|
|
|
bondholders have a greater voice in electing the corporation’s board of directors, since the corporation owes them a great deal of money.
|
Detailed explanation-1: -The main difference between stocks and bonds is that stocks give you partial ownership in a corporation, while bonds are a loan from you to a company or government.
Detailed explanation-2: -If you choose to invest in a company, there are two routes available to you – equity (also known as stocks or shares) and debt (also known as bonds). Shares are issued by firms, priced daily and listed on a stock exchange. Bonds, meanwhile, are effectively loans where the investor is the creditor.
Detailed explanation-3: -Shares are part-ownership in a company, bonds are IOUs Simply put, when an investor buys shares they are buying part of a company; when they buy bonds, they are lending money to a company. Shareholders OWN part of a company whereas bondholders are OWED money by a company.
Detailed explanation-4: -The difference between stocks and bonds is that stocks are shares in the ownership of a business, while bonds are a form of debt that the issuing entity promises to repay at some point in the future. A balance between the two types of funding must be achieved to ensure a proper capital structure for a business.
Detailed explanation-5: -In general, stocks are riskier than bonds, simply due to the fact that they offer no guaranteed returns to the investor, unlike bonds, which offer fairly reliable returns through coupon payments.