Question

Discuss the difference between common stocks and bonds in investments. Discuss fundamental analysis and compare it to technical analysis. Discuss the pros and cons of each.

Answer 1

Difference between common stocks and Bonds-

1. Stocks represents a form of equity while bonds are a representative of leverage

2. Stocks provides with ownership right while bonds provides with right to get repaid earlier

3.The reward for holding stock are divided and capital appreciation while the reward of owning bonds are interest and principal repayment.

Differences between technical and fundamental analysis

1. Fundamental analysis is Method of valuation of stocks while technical analysis is a method of prediction of prices of shares based upon charts.

2. Fundamental analysis is finding about the intrinsic value of the stocks whole technical analysis is more about timing the entry and exit of stock.

3.Fundamental Analysis is done mostly for long term and by investors whole technical analysis is done mostly by traders and for short term

Technical analysis is helpful is finding right valuation but it is not an exact measure and it is a highly complex method

Fundamental analysis is finding short term value in shares by charts and it is not highly accurate and can blow a lot of accounts if caught at the wrong side.