3/22/17: Bonds & Stocks

• Bonds are loans. Stocks you own.

• Bonds-
• Loans that represents debt that the government or a corporation must repay to an investor.
• The bondholder has NO ownership of the company.
• If a corporation issues & then sells a bond, it is a liability
• It's an asset for the buyer
• NIR (Nominal Interest Rate)
• NIR Up = Decrease in value of bonds
• NIR Down = Increase in value of bonds
• Socks owners can earn a profit in 2 ways
1. Dividends, which are portions of a corporation's profits, are paid out to stockholders.
• Higher corporate profit, higher dividend
2. Capital gain is earned when a stockholder sells stock for more than he or she paid for it.
• A stockholder that sells stock at a lower price than the purchase price suffers capital loss.
• Federal Reserve Bank = FED = Capital Bank
• Goals of FED



• Maintain economy
• Full employment