COMMON STOCKS VERSUS BONDS
Common stock is a type of security that represents ownership and expressed in shares in a corporation. The holder of common stock is more volatility and have the voting right to elect the board of directors, employees, et al., and they have rights to the periodic financial reports of a corporation to know their performances. Although common stockholders have lower priority in the events of liquidation, that is, they receive their proceeds of liquidation after bondholders, preferred shareholders and creditors have claimed their earnings.
Therefore, a common stock yield is the ratio of annual dividends paid over the past year or expected for the next year divided by the current share price. For example, a stock expected …show more content…
and in return for the debt obligations; is what is called bond yields, which is the measure of the interest made from the bond investment. It is thereby calculated by dividing coupon/contracted amount by the price. Bonds pay interest semiannually, that is, they can grant a predictable income stream and the importance of the bond yield is that bond price and bond yields are inversely related, which means that the higher the amount paid for a bond, the lower the profit and yield, which makes it cheaper for the government to borrow (sell bond) and the lower the amount paid for a bond, the higher the profit and yield, which makes it arduous for government to reduce their debt. The bond yield is also a paramount indicator of how strong the stock market is and it helps to forecast the future growth and inflation of the …show more content…
Likewise, bond holders are lenders to the issuers, whereas the stockholders have a proportion of the issuing company; the yield analysis for bond is nominal yield, yield to maturity, et al., and that of stock is dividend yield, income per share, earnings yield, et al. Bond is issued by the public sector authorities, credit organization, et al. and owned by bondholders, meanwhile stocks are issued by corporation or joint-stock corporation. Lastly, bond derivatives are bond options, credit default swap, collateralized debt liability, while common share derivatives are credit derivative, hybrid security, options, et
Common stock is a type of security that represents ownership and expressed in shares in a corporation. The holder of common stock is more volatility and have the voting right to elect the board of directors, employees, et al., and they have rights to the periodic financial reports of a corporation to know their performances. Although common stockholders have lower priority in the events of liquidation, that is, they receive their proceeds of liquidation after bondholders, preferred shareholders and creditors have claimed their earnings.
Therefore, a common stock yield is the ratio of annual dividends paid over the past year or expected for the next year divided by the current share price. For example, a stock expected …show more content…
and in return for the debt obligations; is what is called bond yields, which is the measure of the interest made from the bond investment. It is thereby calculated by dividing coupon/contracted amount by the price. Bonds pay interest semiannually, that is, they can grant a predictable income stream and the importance of the bond yield is that bond price and bond yields are inversely related, which means that the higher the amount paid for a bond, the lower the profit and yield, which makes it cheaper for the government to borrow (sell bond) and the lower the amount paid for a bond, the higher the profit and yield, which makes it arduous for government to reduce their debt. The bond yield is also a paramount indicator of how strong the stock market is and it helps to forecast the future growth and inflation of the …show more content…
Likewise, bond holders are lenders to the issuers, whereas the stockholders have a proportion of the issuing company; the yield analysis for bond is nominal yield, yield to maturity, et al., and that of stock is dividend yield, income per share, earnings yield, et al. Bond is issued by the public sector authorities, credit organization, et al. and owned by bondholders, meanwhile stocks are issued by corporation or joint-stock corporation. Lastly, bond derivatives are bond options, credit default swap, collateralized debt liability, while common share derivatives are credit derivative, hybrid security, options, et