Discussion: Valuing Stocks and Bonds
Understanding stocks and bonds and how each is valued is paramount to being a keen investor. Bonds are less risky than stocks as they are a loan that must be paid back by the borrower. Interest rates will determine to a significant degree the value of a bond. Stocks are riskier as many factors such as earnings, revenue, market sentiment, growth prospects, and other factors will determine what a stock is worth. As a financial manager or an investor, a thorough understanding of bonds and stocks will help you to make sound financial decisions both for your organization as well as for you personally.
For this assignment, select a bond feature, and consider why it is important. Also, discuss if the bond feature adds value to either the investor or the issuer. Finally, examine and review the concept of yield-to-maturity and its importance to valuing a bond.
Post a 250 to 300 word document in APA format that identifies the bond feature you selected. Explain the feature in detail and explain the importance of yield-to-maturity. In addition, explain stocks and preferred stocks. Finally, explain why you would, as a personal investor, invest or not invest in stocks or bonds. Justify your rationale.