Which one of the following statements is correct regarding bond and stock differences?
A)Stock is a form of debt financing.
B)Stock must be repaid at maturity.
C)Bonds are a form of debt financing.
D)Bonds do not have to be repaid at maturity.
E)Interest payments to bondholders are paid at the discretion of the board of directors.

Question

Quizplus · Accepted Answer

Bonds are a form of debt financing, meaning when a company issues bonds, it is borrowing money from the bondholders, to whom it will later repay the principal amount along with interest. Stocks represent ownership in a company and do not involve borrowing or repaying funds.

Which One of the Following Statements Is Correct Regarding Bond