Question

How does a bond differ from a stock? Select all that apply.

1. A bond is issued for a certain amount, while stock is a small part of ownership in a company
2. A bond is usually issued by a government, while a stock by a public for-profit company
3. A bond is something you keep forever, while a stock you can buy and sell whenever you want
4. A bondholder receives interest from the bond-issuer, while a stockholder receives nothing until they sell the stock
5. A bond is considered a safer investment, while a stock is considered riskier

Answer 1

1, 2 and 5

Step-by-step explanation:

A bond may be issued by the govt or a public company to raise cash for the time being and return it to the investors when the bond matures. While on the other hand, stocks are a small ownership of the company which you buy at the prevailing price in the stock market. The bonds are held for long term whereas stocks can be bought and sold within the same day. The return on bonds are stated before while stocks depend on the volatility of the stock market therefore its riskier.