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Author Question: Stocks differ from bonds because: A) bond cash flows are known while stock cash flows are ... (Read 83 times)

Chloeellawright

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on: Jul 10, 2018
Stocks differ from bonds because:
 
  A) bond cash flows are known while stock cash flows are uncertain.
  B) firms pay bond cash flows prior to paying taxes while stock cash flows are after tax.
  C) the ending par value of a bond is known at purchase while the ending value of a share of stock is unknown at purchase.
  D) All of the above

Question 2

Bonds are different from stocks because ________.
 
  A) bonds promise fixed payments for the length of their maturity
  B) bonds give payments only after other owners are paid
  C) bonds do not have maturity dates
  D) bonds promise growth in earnings


cat123

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Reply #1 on: Jul 10, 2018
Answer to Question 1

Answer: D

Answer to Question 2

Answer: A
Explanation: A) Bonds give payments before equity owners are paid. Bonds mature while stock have no maturity date. Bond payments are fixed by the coupon payment and do not promise growth in payments.


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