2007-01-28 01:28:52 · 4 answers · asked by Anonymous in Business & Finance ➔ Investing
A large and tricky subject.
The simplest way to answer this question is to discuss what stocks and bonds are.
They are debt instruments to cover the debts of running a business. Companies sell stocks and bonds to cover their debts or to pay for their expansions. Bonds are like secured loans and stocks are like unsecured loans. When you buy stocks and bonds you become the credit card company and/or bank for the company, but the company determines the rates and settings for the nature of the loans.
There are a host of goverment and principality distinctions and rules that guide how these instruments can be redeemed or used. Additionally there are so many different "products" associated with these instruments that you can see a lot of different types of returns. From profit sharing payments to interest tokens on bonds.
How these things work is that a bond or stock is an explicit contract between the purchaser and the issuer of the stock or bond (not necessarily the company that has its name or assets on the form).
Hope this helps.
2007-01-28 01:46:27 · answer #1 · answered by Jason W-S 4 · 0⤊ 0⤋
Jason S summed it all up very nicely. To go further, stocks are an investment in a company. The stocks you buy are the working capital for that company. If the company goes bust, your money is forever gone.
Bonds, on the other hand are a loan to be paid back to you - plus interest. You will never lose the initial cost of the bond - but it may come to only that if the company or fund bites the dust.
Of the two, bonds are by far the better bet for long term investments. The goal is not necessarily to cash them in down the road, but to draw from them only the interest they have accumlated over time. That way both you and the fund benefit.
2007-01-28 02:03:22 · answer #2 · answered by north79004487 5 · 0⤊ 0⤋
Stocks are a bit more simple as I have been in the game for a while, but I don't believe explaining it in detail is required... instead play the Stock Game http://www.flashadd.com/?p=7 and with that you will find yourself knowing everything but in a fun way.
2007-01-28 03:32:35 · answer #3 · answered by kiderkid3 1 · 0⤊ 0⤋
I would suggest you to check the website below to learn more on stock market and how to select the best stocks.
Hope it helps
http://money-review-site.com/shares.html
http://www.money-review-site.com
2007-01-28 08:04:09 · answer #4 · answered by Anonymous · 0⤊ 0⤋