Part 1Bonds are different from stocks because ________. Part 1
A. bonds promise fixed payments for the length of their maturity B. bonds give payments only after other owners are paid C. bonds promise growth in earnings D. bonds do not have maturity dates

Question

Part 1Bonds are different from stocks because​ ________. Part 1
A. bonds promise fixed payments for the length of their maturity B. bonds give payments only after other owners are paid C. bonds promise growth in earnings D. bonds do not have maturity dates

BlackTom AI · Accepted Answer

Clarifying the question: Part 1 asks why bonds are different from stocks, presenting four options to compare typical bond characteristics with stock features.
Option A: 'bonds promise fixed payments for the length of their maturity' This statement is accurate because most standard bonds provide fixed coupon payments at regular intervals and a principal repayment at maturity, which distinguishes them from equities that typically have no guaranteed payments. The fixed income structure is a core bond attribute.
Option B: 'bonds give payments only after other owners are paid' This is not generally true for bonds. While bondholders have priority over shareholders in bankruptcy relative to equity, the phrasing suggests a definite ordering after all other owners are paid, which is not standard terminology and can be misleading. In practice, bond creditors are paid before equity investors if a payout occurs, but the phrase implies a blanket condition that isn’t the defining feature distinguishing bonds from stocks.
Option C: 'bonds promise growth in earnings' This is inaccurate. Bonds do not promise growth in earnings; they promise fixed income or a return of principal. Growth in earnings is a characteristic more associated with stocks, not bonds, which are debt instruments with predetermined payments.
Option D: 'bonds do not have maturity dates' This is factually incorrect for conventional bonds. A key feature of most bonds is their finite term to maturity, at which the principal is repaid. While there are perpetual bonds in some markets, the standard description of bonds emphasizes a defined maturity, making this statement false.
Summary: Among the options, only A correctly captures a fundamental difference between bonds and stocks by highlighting the fixed payments tied to maturity, while B, C, and D either misstate typical bond features or confuse concepts related to debt versus equity.

Test:Midterm - Oct 22 2025

Part 1Bonds are different from stocks because ________. Part 1 A. bonds promise fixed payments for the length of their maturity B. bonds give payments only after other owners are paid C. bonds promise growth in earnings D. bonds do not have maturity dates

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