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Why stocks are treated as equity, while the bonds as debt?
This is because the bonds provide a guaranteed
return on the investment with a higher claim too. On the other hand,
shares doesn’t always guarantee return on the investment and so is
riskier, but the shares provide comparatively higher returns on the same
amount of investment.
This means that you get more money from the same
amount of investment from stocks than from bonds, if your investment is
in a profitable company, but you also have the risk to loose all of your
money if your decision to choose a particular stock proves a mistake.
There are mainly two kinds of stocks: common & preferred. Companies can
form classes within their stocks at their will.
So, always remember one thing that it is not too
difficult to understand the stock tables or stock quotes, if you know
what does mean a specific term there. |