Part 5

What Is The Difference Between Stocks and Bonds?

Stocks are rights to a portion of residual cash flows in a business. If a company does better than investors thought and has more profits than expected after all expenses, then the value of your claim on that business's cashflows should go up. Therefore, you want to pick winners that will engender a level of profits that will cause the value of your equity to appreciate. In terms of bonds, they are specified cash flows tied to a specific debt.

As long as a company is financially solvent, it ...

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Beginner
Financial Instruments! How to use them and what are they for!
8 Lessons
~22 mins in total
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