Question

How do stocks and bonds differ?

Answer 1

Answer:

D. Stocks are good for income while bonds are good for long-term growth.

Explanation:

A Stock is the smallest unit of a corporation. A stockholder is one of the owners of a corporation. Should the corporation makes profits, stockholders are entitled to dividends. Stocks are traded in the exchange markets. When the market or the corporation is doing well, stock price increases representing a capital gain to the shareholders.

Bonds are debts instruments that governments and corporates use to raise capital. They present long term investment opportunities to investors. Bonds offer regular and fixed interest payments to investors until maturity.

Stocks are riskier than bonds. Stock prices experience volatility as they trade every day. Their prices are likely to rise when the markets are favorable, which means profits to investors. Bonds are less risky and offer stable incomes for the long term.