Because stocks rely on dividends as the principal source of cash flow, ascertaining stock prices is an easier and more precise process than the valuation of bonds, which relies on variable coupon payments.

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Valuing stocks is often considered more complex than valuing bonds because stocks do not guarantee cash flows like bonds do with their fixed coupon payments. Stocks' dividends can vary and are not guaranteed, making their future cash flows more uncertain and their valuation more challenging.

Because Stocks Rely on Dividends as the Principal Source of Cash