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1、Stocks and BondsSome people are content to limit their investment programs to such safe investments as savings accounts and savings bonds. They take comfort in knowing that while the return from such investments may be small, it is steady and sure. Other people seek investments that involve higher r
2、isks. They understand that the amount of money an investment returns is frequently related to the amount of risk it involves. Because they want to obtain the greatest possible return on each dollar invested, they are willing to take certain chances. Still another group of people want both the comfor
3、t of safe investments and the greater dollar return of high-risk investments. Accordingly, they prefer a program that has a balance of both safe and high-risk investments.For the last two groups, the most popular types of high-risk investments are those that involve securities. Securities, which is
4、a general term for stocks and bonds, are sold by governments and corporations in order to raise large amounts of money.There are three ways in which businesses that need a great deal of money for a long period of time can obtain that money. They can go to a bank and apply for a long-term loan. They
5、can use the profits of the business. But banks are often reluctant to lend large amounts for periods longer than one or two years. And profits are ordinarily not large enough to finance anything very expensive. Therefore whenever businesses or governments need financing for major projects or for gro
6、wth they must raise the money through the sale of securities.BondsA bond is like a promissory note, except that it is issued either by a business or by a government unit such as a city, county, or state. Whey you buy a bond, you are really lending money to the government or business from which you b
7、uy it. In return, you receive from the seller a written promise to pay you a definite sum of money, plus interest, at a future date.There are two types of bonds. Government bonds are issued by state and local governments to help pay for improvements such as streets, schools, and public buildings. Co
8、rporate bonds are issued by businesses to raise money for expansion and growth.The denomination is the sum of money that the bond represents. This sum is printed on the bond. The interest rate is set at the time a bond is issued. It remains the same until the bond matures. The maturity date of a bon
9、d is also fixed. Bonds may be issued for such periods as 10, 20, or 30 years. Suppose you bought a $1,000 bond at 6 percent interest for 20 years. Each year you would receive $60 in interest (6 percent of $1,000). The interest would probably be paid to you in two payments, $30 every six months. Afte
10、r 20 years, the bond would mature, and you would receive $1,000- the price you paid when you first bought the bond. Bonds may be either registered or bearer bonds. A registered bond is a bond that has the name of the owner recorded with the issuer of the bond. Interest is mailed directly to the pers
11、on registered as the owner. A bearer bond is a bond whose owner is presumed to be the person who has possession of the bond. Bearer bonds are not registered. When interest payments are due on a bearer bond, its possessor clips a coupon from the bond and sends the coupon to the issuer for payment.Bon
12、ds are also classified according to the type of security that backs them up. A mortgage bond is backed by the issuers pledge of buildings, land and equipment as security. A debenture bond is backed only by the issuers promise to pay when the interest and principal are due.1. According to the text, w
13、hich is considered the safest program of investment? Saving 2. The essential difference between a registered bond and a bearer bond lies in that _.3. In terms of safeness, a mortgage bond is _safer than_ a debenture bond. 4. Which can NOT be a feature of a bond?5. We can infer from the passage that
14、the safest form of bond, in theory, is _government bond with mortgage_.StocksAs a bondholder you are a creditor of, or lender to, a business firm or government unit. As a stockholder, however, you are one of the owners of a corporation. Stock represents a share of ownership in a corporation. A stock
15、holder may own one share or many shares of a corporations stock, and each share may cost several dollars or several hundred dollars. Upon purchase of a stock, a stockholder receives a stock certificate, a printed form that states the number of shares a person owns in a corporation. You can buy eithe
16、r common or preferred stock. Common stock is stock that permits owners to vote for directors at the annual meeting of the corporation and to share any profits or losses. Holders of common stock share indirectly in the management of the corporation by voting for the directors, who in turn appoints the people who manage the corporation. Although there is greater risk in owning common stock than in owning preferred stock or bonds, ther
