Question

In: Finance

1. Why do you think investors want to own stocks instead of bonds, besides the opportunities...

1. Why do you think investors want to own stocks instead of bonds, besides the opportunities to earn superior returns? Write 100 words.

2. What preference do you have regarding owning stocks vs. bonds? Why do you have that preference? Write 100 words.

3. How many different stocks and or bonds do you own? Do you have a diversified portfolio? Write 100 words.

Please write in your own words. Please write appropriate answers and don't copy them from anywhere. Thank you!

Solutions

Expert Solution

1 . Stocks instead of bonds....

Stocks are popularly known as equity and are fractional ownership in capital of the company. There are two ways of earning by investing in stock i.e. appreciation in price of stock and dividend issued by company..

Bonds are debt instrument where investor will get yearly interest payment and principal at maturity. Bonds are considered more risk free financial instrument.

Stocks are known more risky , however they are more popular as they attracts more gains at the extent of price appreciation. Looking at the short term view of some investors, they found stocks are good option to earn more money within short span of time. Stocks are known for readily availability to trade and variety of available stocks . Thus investors can get many options to invest in stock v/s bonds. In case bonds you need to wait till maturity for whole principal amount redemption, however in case of stocks there is no such conditions.

2. Preferences of owning stocks vs bonds

Investor can take advantage of unlimited gains in case stocks vs bonds

Faster settlement

More flexibility to square off your position

Easy stock management is possible using technology using brokers's mobile app. etc


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