Describe two main differences between bonds and stocks. What ...

[CQXA]

Describe two main differences between bonds and stocks.
 
  What will be an ideal response?

Question 2

Incentives
 
  A) are always used to encourage particular behaviors.
  B) are always used to discourage particular behaviors.
  C) can be used to either encourage or discourage particular behaviors.
  D) are never used to encourage or discourage particular behaviors.

[josephsuarez]

Answer to Question 1

Stocks represent ownership of the issuing company, whereas bonds are a debt of the issuing company. Because stocks represent ownership of a company, a stockholder has a claim on (part) of the company's profit. Bondholders, however, have no claim on the company's profit. Instead, they have a promise by the company to pay them specified amounts of money at specified dates in the future.

Answer to Question 2

C

[CQXA]

Gracias!

[gcook]

TYSM