Question

What is stock? What is a bond? How are they different? How are they similar?

Define private saving, public saving, national saving, and investment. How are they related?

Answer 1

STOCK

The ownership certificates of a firm are generally referred to stock. Preferred and common are the two different types of stock. Stock helps a firm to enhance the initiatives of a company. Investors have positive gain when the stock have value more than they are paid to buy the stock. Investors mostly prefer stable companies to ensure their stability of profits.

BOIND

Bonds are issued by firms, organizations and government to raise money. The issuer receives loan through bond. The value of bonds keep on changing and it makes the investors attraction in bonds.

DIFFERNCE

The major difference between bonds and stock is that the bonds don’t have any ownership rights. Whereas the stock has the right of ownership. It means that for a bo9nd buyer the developments of the company don’t matters but it matters for a stock buyer. Bond shows debt of a firm and stock shows the ownership. Bond holders have no votes in the critical decision taken by the company. But stock holders have the power to vote. Dividend is the benefit received by the stock holder where as the interest are are the benefit garneted to bond holders.

SIMILARITIES

While looking into the similarities one off the major similarity is that both the bonds and stock are sold to the investors in order to raise fund for firm or government etc. Both are financial securities and it is used by the firm to raise funds in the case of necessities. The amount received by the firm from both bond holders and stock holders are repayable in the future.

PRIVATE SAVING

Private saving refers to the sum total of saving by households and the non financial and financial corporation in private sector. It is the amount which is kept by the households as savings after meeting the consumption expenditure and tax expenses.

PUBLIC SAVING

The term public savings simply means budget surplus. It is calculated by subtracting government expenditure on goods and services and transfers from government revenue through taxes. The sum total off private and public saving is thee investment in the economy.

NATIOANL SAVING

National savings refers to the total of public as well as private saving. It is the rate which is saved by reducing the spending in an economy. It indicates the health of a nation thou8ggh it depicts the savings off the nation. The savings of economy later leads to investments.

RELATION BETWEEN PUBLIC NATIONAL AND PRIVATEE SAVING

The private public and national savings are inter related. The total of private as well as public saving is the national saving. All these savings will boost the economic growth of a nation. A the individual savings and government savings increase the savings of the nation also increase. Individual savings is the amount kept by individual without spending and public saving in made by government by reducing expenses. Both the savvi9ngs are essential for increasing the standard of living of individual in a country.