Question

In a paragraph compare characteristics of corporate bonds and stocks. List three to five characteristics.

Answer 1

1.Stocks represent shares in the ownership of business whereas bonds are debt that will be repaid in some time in future by the issuing entity.

2.The holders of stock have the voting right,it means they can vote of certain issues like appointment of directors.While,bondholders have no voting rights.

3.In case of bond,company has the obligation to make periodic interest payment.Whereas,in case of stock,company has the option to rewards its shareholders with dividend.

4.In the event of liquidation of company,bondholders have priority over stockholders.Thus stock are riskier investment than bonds.