Bonds Differ from Stocks in All of These Ways Except

question 120

Multiple Choice

Bonds differ from stocks in all of these ways except:

• A)a purchase of corporate stock becomes a part owner of the corporation, while a bondholder does not 
• B)a bondholder loans money to the corporation, which has priority for repayment, while a stockholder may lose her investment 
• C)stockholders know with a high degree of certainty how much money they will get, while bondholders do not 
• D)all of these are correct

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Definitions:

Mass Production

The manufacture of large quantities of standardized products, often using assembly lines or automated technology, to achieve economies of scale.

Cost Savings

A reduction in expenses achieved by purchasing the same goods or services at lower prices, or by employing more efficient or effective operations.

Business Start-Ups

New business ventures often characterized by innovation, high risks, and the potential for significant growth.

Behavioral Economics

The branch of economic theory that combines insights from economics, psychology, and biology to make more accurate predictions about human behavior than conventional neoclassical economics, which is hampered by its core assumptions that people are fundamentally rational and almost entirely self-interested. Behavioral economics can explain framing effects, anchoring, mental accounting, the endowment effect, status quo bias, time inconsistency, and loss aversion.