Which statement is TRUE regarding various instruments in financial markets?
A) Compared with bonds, stocks provide equity and higher risk.
B) Compared with bonds, stocks provide higher risk and lower returns.
C) Compared with bonds, stocks provide lower risk and higher returns.
D) Compared with bonds, stocks provide less equity and lower risk.

Question

Quizplus · Accepted Answer

Stocks provide equity ownership in a company, which typically comes with higher risk compared to bonds, which are debt instruments. Stocks have the potential for higher returns due to this risk, contrasting with the fixed income provided by bonds.

Which Statement Is TRUE Regarding Various Instruments in Financial Markets