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Business (General)

Research guide for general business topics

Stocks & Bonds

In general, a stock is a type of security representing a share in the ownership of a business or company.

Stocks may be common or preferred. Common stocks are those that are most typical in U.S. markets; they can be bought or sold at will and holders of them often have some voting rights in company decisions due to their status as stakeholder. Preferred stocks are more complex, but generally take on the characteristics of both potential appreciation (equity) and fixed dividends (debt).

In general, a bond is a certificate of debt issued by a company or government. The holder of the bond is guaranteed to earn interest on the amount of the bond over a set period of time. When the bond matures and is redeemed, the issuer must pay the bearer the principle amount plus all accrued interest. Interest also may be paid to the bearer at fixed intervals throughout the term of the bond.

Bonds may be secured or unsecured. Often, secured bonds are backed by a company's or government's assets that could transferred to the bearer should the issuer default.

The above discussion has been adapted from the following source:

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