ECONOMICS (CBSE/UGC NET)

Detailed explanation-1: -Given the numerous reasons a company’s business can decline, stocks are typically riskier than bonds. However, with that higher risk can come higher returns.

Detailed explanation-2: -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.

Detailed explanation-3: -Equities are generally considered the riskiest class of assets. Dividends aside, they offer no guarantees, and investors’ money is subject to the successes and failures of private businesses in a fiercely competitive marketplace. Equity investing involves buying stock in a private company or group of companies.

Detailed explanation-4: -While stocks are ownership in a company, bonds are a loan to a company or government. Because they are a loan, with a set interest payment, a maturity date, and a face value that the borrower will repay, they tend to be far less volatile than stocks.

Detailed explanation-5: -A stock that swings more than the market over time has a beta above 1.0. If a stock moves less than the market, the stock’s beta is less than 1.0. High-beta stocks are supposed to be riskier but provide higher return potential; low-beta stocks pose less risk but also lower returns.