Your Questions About Stocks And Bonds

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Mark asks…

Stocks/Bonds in relations to Macroeconomics…?

I have created a website on bonds and stocks investments for a high school Economics 12 course. I am just wondering what other topics I can add on to my site regarding bonds and stocks in relations to macroeconomics.

http://www.freewebs.com/timsecono12/

Please post a few comments or start a post in the forum after visiting my site. Thanks!

financi4 answers:

Stocks don’t really confer partial ownership of a companies profits unless you have preferred stock as far as I know. Typically it’s just voting rights as to the board of directors. With your valuing of stocks, you’re kind of alluding to a very basic share price to earnings per share ratio as a measure of worth without really explaining that consistent profits don’t mean the stock goes up every year. They have to grow their earnings.
As for other important things for High schoolers, I’d say maybe the foreign exchange market and mutual funds. Derivatives would be too complex but it’s important to understand how much money moves around just in efforts to hedge against potential loss.

Thomas asks…

Why do companies sell stocks and bonds?

Please keep the answer short? and can you answer this:
Bonds are an example of what type of capital? What do bonds represent?

financi4 answers:

Bonds are debt capital. They represent a loan to the company, and a liability for the company. The company has a contractual obligation to pay back bondholders.. Stocks and bonds are sold to raise money to invest into the company.

Ken asks…

Is there an online service (like ShareBuilder) where I can manage my portfolio but buy stocks AND bonds?

ShareBuilder is inexpensive and great, but they only allow investments in equities. I’d like to manage a portfolio online (and inexpensively!) that would allow me to also buy municipal bonds or treasuries. Do you know of one?

financi4 answers:

Scottrade.

You can purchase:
Corporate bonds
Municipal bonds
Agency bonds
CD’s
U.S. T-bills, notes, bonds, and zeros.
Mutual funds
Common stock
Preferred stock
ETF’s
Options

Michael asks…

What is the difference between stocks and bonds?

Which represents more risk to the company? Why?

financi4 answers:

Stocks represent ownership. If you buy stock in a company, you own a small piece of it. A bond is simply a loan. If you buy a bond, you are giving some corporation a loan that they will pay back with some interest.

Bonds are not risky as they have a set payment schedule so there are no suprises. There is no such guarantee with stocks.

Chris asks…

What is the best published book on stocks and bonds analysis to date? How can I get it?

What I have currently on the subject is both of Benjamin Graham’s books. However, they are quite antiquated,196o’s and 1973. I would like to buy one thats in with the now times.

financi4 answers:

I don’t think Ben Graham’s advice is at all antiquated. It is actually the principles that apply across time. But, there are a few other books you could add on. I’m fond of Peter Lynch’s “One Up On Wall Street” and more recently, Jeremy Siegel’s “Stocks for the Long Run”. I know Siegel has a newer book out too, “The Future for Investors”, but I haven’t read that one yet, so I can’t recommend it yet, but I suspect it is also valuable. They should all be available at amazon.com

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