A Bond Differs from a Share of Stock in That

question 67

Multiple Choice

A bond differs from a share of stock in that:

• A) a bond represents a claim on the firm.
• B) a bond has more risk.
• C) a bond has guaranteed returns.
• D) a bond has a maturity date.

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Definitions:

Capital Gains Yield

The price appreciation component of the total return on an investment, excluding dividends.

Dividend

A portion of a company's earnings distributed to its shareholders, typically in the form of cash or additional stock.

Shares

Ownership stakes in a company or financial asset which entitle the holder to a proportional share of the profits, distributed as dividends, if they are announced.

Standard Deviation

A statistical measure of the dispersion or variability of a set of data points around the mean, commonly used to quantify the amount of variation.