Question

1. How are stocks and bonds similar, and how are they different?

Answer 1

Stocks offers you dividend, earnings over price appreciation, and higher earnings than any common fixed deposit or bank interest can earn. Bond offers interest on paid principal over particular horizon and the interest can be either floating or fixed. Stocks and Bonds are one way to raise more money for an individual's or businesses income. Bonds compared to stocks avoid the market volatility but offer less of earnings than a stock can give. Thus bonds are considered to be more secure than stocks. Stocks give out more money when one trades by considering more risk and considered to be less secure and chances are that a stock investor could even lose out on his principal, whereas a bondholder won't lose any stake in his bond holdings. Stocks give out dividends when the company runs into more cash flows, but bonds don't consider paying back any extra buck other than offered interest payments. When one considers to secure his money , he can consider bonds. When one considers his money to make more money, he can consider bonds. When one considers to hold a diversified portfolio, he can follow up sixty percent equity and forty percent of bonds.