Question

Stocks and bonds differ in that stocks pay fixed dividends, wheras bonds pay a variable amount of interest at regular intervals. bonds pay fixed dividends out of revenues, whereas stocks pay a variable amount of interest at regular intervals. stocks pay dividends out of profits, whereas bonds pay a predetermined amount of interest at regular intervals. bonds pay dividends out of profits, whereas stocks pay a predetermined amount of interest at regular intervals. b. Stocks are considered less risky than bonds, because companies need to have earnings to stay in business. more risky than bonds, because stock prices and profits are highly variable. almost risk-free, since companies need to have earnings to stay in business. less risky than bonds, because stock prices and profits are not highly variable. c. Which investment commonly goes by the name "fixed income"? Stocks Mutual funds Stocks and bonds Bonds

Answer 1

Stocks and bonds differ in how they yield returns and their risk levels, with stocks being more risky and fluctuating. Bonds, which are known as 'fixed income' investment, provide fixed interest payments.

Step-by-step explanation:

The differences between stocks and bonds pertain to the type of returns they yield and the level of risk they carry. Stocks pay dividends out of profits, whereas bonds pay a predetermined amount of interest at regular intervals, and this dividend for stocks is not fixed, while interest on bonds is fixed. Therefore, stocks are considered more risky than bonds because their prices and profits can fluctuate quite a lot, whereas bonds are more secure and consistent.

In terms of the investment known as 'fixed income,' this is referring to bonds. A fixed income investment provides a return in the form of fixed periodic payments and the eventual return of principal at maturity unlike stock dividends which can vary based on the company's profit.

Learn more about Difference between Stocks and Bonds

Answer 2

bonds are fixed income instruments

Step-by-step explanation:

Bonds are commonly referred as fixed income financial instruments as the coupons ( cash payments are predetermined upon issuance of the bond to the public based on the bond issuance rate). Bonds are issued by corporate organisations and governments to raise funds to finance development or expansion as the case maybe. Stocks are variable and determined from profit realized by the company at the end of each financial year.