Indicate the differences between a bond and a stock. Why is a bond typically (yes, there...

Indicate the differences between a bond and a stock. Why is a bond typically (yes, there numerous counter examples to this) considered to be a lower risk investment? Explain.

Expert Solution

Stock or shares represent ownership interest in a publicly owned corporation.
Common stock or shares do not have maturity dates.
Stocks pay dividends only when the board of directors declare a dividend. Dividends
are distribution of a company's profits among its shareholders.
Dividend payments are not tax deductible for corporations or companies.
Stocks are usually traded on an exchange.

Bonds are a type of long-term debt in which the issuing company promises to
pay the principal amount on a specified maturity date.
Bonds usually make fixed interest payments every six months to the bondholders
until the bonds mature. The interest paid by the issuing company is tax deductible when the issuing companies
file for a tax return.
Bonds are traded in an over the counter market.

Bonds are typically lower risk investments compared to stocks because
bonds have more certain cash flows, since they are required to pay the principal on maturity.
Moreover, bonds are required to make fixed interest payments in the interim period.
In addition, bonds have a fixed maturity date.
In the case of bankruptcy, bondholders have a right on the assets of a company ahead
of the stock owners.

Rahul Sunny answered 2 years ago

Discuss the differences between a stock dividend and a stock split. Why are these actions important...

Discuss the differences between a stock dividend and a stock split. Why are these actions important to stockholders?

Explain whether there are typically differences between the past performance and the future performance of a...

Explain whether there are typically differences between the past performance and the future performance of a financial investment? If not, why not?

Indicate six key differences between a deque and a vector. in C++

Indicate whether the items are permanent differences or temporary differences. For temporary differences, indicate whether they...

Indicate whether the items are permanent differences or temporary differences. For temporary differences, indicate whether they will create deferred tax assets or deferred tax liabilities. 5. Installment sales of investments are accounted for by the accrual method for financial reporting purposes and the installment method for tax purposes. 6. Interest is received on an investment in tax-exempt governmental obligations. 7. For some assets, straight-line depreciation is used for both financial reporting purposes and tax purposes, but the assets’ lives are...

What are the differences between accrual entries and deferral entries? What types of accounts are typically...

What are the differences between accrual entries and deferral entries? What types of accounts are typically affected by these two types of entries? Explain why accrual and deferral entries do not pertain to the cash method of accounting

Which of the following are typically used to determine differences in DNA sequence between individuals? Select...

Which of the following are typically used to determine differences in DNA sequence between individuals? Select all that apply. a) cloning b) DNA fingerprinting of STRs c) DNA sequencing d) RFLP analysis e) gel-filtration chromatograpgy f) western blot

For each of the items listed below, indicate “yes” if the statement is true and “no”...

For each of the items listed below, indicate “yes” if the statement is true and “no” if it is not true. If you indicate “no” (ie the statement is NOT true) you must describe the hazard and associated risk, and indicate the action required. FILL OUT THE TABLE BELOW! The Question is above :) Item Yes ✓ No ✗ Description of hazard Associated risk Action required (more than one item may be chosen) The workplace is clean and tidy ☐...

Choose "yes" or "no" as applicable for each of the following items to indicate whether the...

Choose "yes" or "no" as applicable for each of the following items to indicate whether the cost can appropriately be debited to the plant asset ledger account. Transportation costs to ship the asset to our facilities. (Y/N) Set up and installation costs of the asset. (Y/N) Insurance while the asset is in transit to our facilities. (Y/N) Insurance while the asset is being run during routine operations. (Y/N) Costs to train employees on how to use the new asset. (Y/N)...

Select either "Yes" or "No" to indicate if the statement applies to taxpayers with a qualifying...

Select either "Yes" or "No" to indicate if the statement applies to taxpayers with a qualifying child looking to claim the EIC. a. The child must meet the support test b. The taxpayer cannot be the qualifying child of another taxpayer c. Qualifying child cannot be claimed by more than one person d. The child must live in a U.S. home for the entire tax year

Signify YES or NO as applicable for each of the following situations to indicate whether the...

Signify YES or NO as applicable for each of the following situations to indicate whether the situation would result in the net book value of bonds payable EQUALING the balance of the bonds payable ledger account. - A. B. The bonds were issues at face value. - A. B. The bonds were issued at a premium. - A. B. ...

Question