Bibliography Essay Example | Topics and Well Written Essays - 750 words

Bibliography - Essay Example Investors who are risk-averse and are searching for a recognized periodic payment arrangement usually prefer to invest in bonds. On the other hand, investors who wish to risk more than is the case with bondholders, and are seeking to be included as joint partners in a corporation. Investors who are risk-averse and are searching for a recognized periodic payment arrangement usually prefer to invest in bonds. On the other hand, investors who wish to risk more than is the case with bondholders, and are seeking to be included as joint partners in a corporation. The source describes one disadvantage in investing in stocks being that they do not necessarily guarantee returns. Bonds, however, guarantee returns (Kristof, 17). The source also states that there are greater prospects of high returns with stocks, even though there is also the likelihood of losing money. Compare and contrast the advantages and disadvantages of each? Milevsky, Moshe. Are You a Stock or a Bond?: Identify Your Own H uman Capital for a Secure Financial Future, Updated and Revised. New York: FT Press, 2012. The source describes stocks and bonds as being types of investment that give people the chance to invest their money in a specific business establishments in the hope of accruing handsome profits in future. Though both of these have a number of similarities, they also differ considerably in many ways. Both of these financial tools, in general, allow an individual to be able to invest in private or public companies, in the hope of being a future beneficiary through accrued profits. Stocks, which define the ownership shares in a corporation, are often the most favored by short time investor. One disadvantage in investing in stocks is that they do not necessarily guarantee returns. Bonds, however, guarantee returns. Therefore, there are greater prospects of high returns with stocks, even though there is also the likelihood of losing money. The source asserts that stocks are descriptive of a busin ess’s shares (Milevsky, 84). When a shareholder uses his own money to buy stocks from the company, he is actually acquiring ownership of the business. When the business realizes any profit, a percentage of it is given to the shareholders. In the matter of bonds, when a person invests in them, he is actually lending money to the business in question with the expectation that the firm will reimburse the bonds' amount along with a pre-determined interest rate on a definite time period. According to the source, business establishments may need to raise capital in such ways in order to expand into different localities or new ventures. They also raise capital in order to fund their businesses. Usually, it is the developing businesses that favor issuing stocks to get the necessary finances as this facilitates their growth while helping them to avoid accumulating more debt. The larger corporations are more likely to prefer acquiring capital by availing bonds without giving the chance of ownership to additional shareholders. The Risks involved in making investments in stocks and bonds Bernstein, William. The Ages of the Investor: A Critical Look at Life-cycle Investing. New York: CreateSpace Independent Publishing Platform, 2012. The source states that for the most part, making such investments in a company always has different risks for the shareholder; but can also deliver handsome profits (Bernstein,