Stocks generally have higher risk than bonds.

Stocks generally offer higher potential returns than bonds.

Stocks represent ownership in a company, while bonds represent a loan to a company or government.

Equity financing involves selling stocks, while debt financing involves issuing bonds.

Demand deposits are more liquid than bonds, as they can be accessed immediately, while bonds need to be sold.

Stocks may provide income through dividends, while bonds provide income through interest payments.

High liquidity assets (e.g., cash) can be quickly converted to cash, while low liquidity assets (e.g., real estate) take longer.

Bond prices are inversely related to interest rates, while stock prices are influenced by a wider range of factors including company performance and economic conditions.

Bondholders have a higher claim on a company's assets in bankruptcy than stockholders.

Stocks are generally more suitable for investors with a higher risk tolerance and longer time horizon, while bonds are more suitable for investors seeking stability and income.

Things that hold value, like cash, stocks, and bonds.

How easily an asset can be converted into cash.

The net gain or loss on an investment over time.

The chance that an investment's actual outcome differs from the expected one.

A security representing ownership in a company.

Companies sell stocks to raise capital, avoiding debt but sharing ownership.

An interest-bearing asset issued by businesses or governments.

Companies issue bonds to borrow money, promising to repay the principal plus interest.

Borrowing money and repaying it with interest.

Money in your checking account that you can access anytime.

Stocks are generally more liquid than real estate because they can be quickly converted to cash, whereas selling real estate takes time.

Companies sell shares of stock (equity financing) to raise capital without incurring debt. This dilutes ownership but provides funds for growth.

Companies issue bonds (debt financing) to borrow money from investors, promising to repay the principal plus interest over a set period.

When you use a credit card, the bank pays for your purchase, and you repay the bank later with interest if you don't pay the balance in full by the due date.

Debit cards allow you to directly access your demand deposits (money in your checking account) to make purchases without incurring interest.

The opportunity cost of buying bonds is the potential alternative use of that money, such as spending it or investing in other assets like stocks, which may offer higher returns but also carry more risk.

Individuals with a high risk tolerance may prefer investments like stocks, which have the potential for high returns but also carry a higher risk of loss. Those with low risk tolerance may prefer bonds or savings accounts.

The stock market allows companies to raise capital through initial public offerings (IPOs) and subsequent stock offerings, providing funds for expansion and innovation.

When bond prices are high, it indicates lower interest rates, making it cheaper for companies to borrow money by issuing new bonds. Conversely, low bond prices (high interest rates) make borrowing more expensive.

When interest rates are rising, newly issued bonds offer higher returns, making existing bonds with lower interest rates less attractive and decreasing their price.