Chapter 26 - Rikki Norton Chapter 26 1. What are the basic...

Info iconThis preview shows pages 1–2. Sign up to view the full content.

View Full Document Right Arrow Icon
Rikki Norton Chapter 26 1. What are the basic differences between bonds and stocks? The basic differences in a bond and stock are: -The sale of stocks is equity finance and the sale of bonds is debt finance -Stockholders are partial owners and bond holders are just creditors -Stockholders make money off of their stock and bond holders only receive the interest -Bond holders are paid back before stockholders in the company suffers difficulty 2. Which of the two bonds in each example would you expect to generally pay the higher interest rate? Explain why. a. a U.S. government bond or a Brazilian government bond A Brazilian Government bond because they are not considered a safe credit risk b. a U.S. government bond or a municipal bond with the same term and issued by a creditworthy municipality. A U.S. government bond because the municipal bonds have a tax advantage c. a 6-month Treasury bill or a 20-year Treasury bond A 20 year treasury bond because it has a longer term d. a Microsoft bond or a bond issued by a new recording company
Background image of page 1

Info iconThis preview has intentionally blurred sections. Sign up to view the full version.

View Full DocumentRight Arrow Icon
Image of page 2
This is the end of the preview. Sign up to access the rest of the document.

Page1 / 2

Chapter 26 - Rikki Norton Chapter 26 1. What are the basic...

This preview shows document pages 1 - 2. Sign up to view the full document.

View Full Document Right Arrow Icon
Ask a homework question - tutors are online