Investing in a company’s common stock is more risky than in the same company’s bond because...
Investing in a company’s common stock is more risky than in the same company’s bond because _____________.
the stock has voting rights.
the bond can be called back.
the stock has a higher par value than the bond.
the bond’s future cash flows are more certain than the stock’s.
Homework Answers
Stocks are riskier than the bonds because, bonds usually offer certain cash flows in the future whereas stocks do not.
Common stock holders are entitled to dividend whereas bond holders are entitles to Interest payments. Dividend is declared at the discretion of the company whereas interest on bond is a more certain one irrespective of the reserves of the company.
Therefore, last option is the correct answer.
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