Question

Why is it considered risker to own stock in a software company than to hold U.S. Treasury savings bonds? Which asset will generate higher return? Why do people say "A dollar today is worth more than a dollar tomorrow?"

Answer 1

A software company (or any business concern) deals with many types of risks, e.g., business risk, credit risk, liquidity risk, macroeconomic risk, competition, etc. Any of these can be significant enough to derail its business and prospects. If a business fails due to any of these risks, there is generally no recourse, and the investors (stockholders) lose their investment.

US Treasury savings bonds, on the other hand, are guaranteed by the govt, and hence are 'risk-free.'

Following the concept of high-risk high-return, stock in a software company is expected to yield higher return, as compared to the US Treasury savings bond.

In order for people to part with their dollar (or consumption) today, they need to be promised something higher tomorrow (or one year later). This is the return or interest, which is used to compensate people for foregoing consumption today (in exchange for a higher amount in the future).