Stocks vs. Bonds

I.            Bonds are loans; IOU's that will be paid back.

            a.            The borrower is the company or government.

            b.            Bond holder is lender (person who gives money and receives bond)

             c.            If nominal interest rate increases, the value of the bond decrease.

II.            Stocks are owned

III.            Stockowners can earn profit via:

            a.            Dividends: portions of a corporation's profits based on stock percentage.

             b.            Capital gain: selling the stock for more than one purchased it for. Capital loss is the opposite of this.