Table of contents

1. Introduction to Accounting1h 21m
2. Transaction Analysis1h 13m
3. Accrual Accounting Concepts2h 38m
4. Merchandising Operations2h 30m
5. Inventory1h 55m
6. Internal Controls and Reporting Cash1h 16m
7. Receivables and Investments3h 8m
8. Long Lived Assets5h 1m
9. Current Liabilities2h 19m
10. Time Value of Money1h 23m
- Time Value of Money Equations
  35m
- Using Time Value of Money Tables
  47m
11. Long Term Liabilities2h 45m
12. Stockholders' Equity2h 15m
13. Statement of Cash Flows2h 24m
14. Financial Statement Analysis5h 25m
15. GAAP vs IFRS56m

12. Stockholders' Equity

Characteristics of a Corporation

Financial Accounting

12. Stockholders' Equity

Characteristics of a Corporation

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Multiple Choice

Which of the following describes a major difference between stocks and bonds?

Stocks must be repaid at maturity, while bonds have no maturity date.

Stocks represent ownership in a corporation, while bonds represent a loan to the corporation.

Bonds provide voting rights in corporate decisions, while stocks do not.

Stocks guarantee fixed interest payments, while bonds do not pay any interest.

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Verified step by step guidance

Understand the key characteristics of stocks and bonds: Stocks represent ownership in a corporation, while bonds represent a loan made to the corporation by investors.

Recognize that stocks do not have a maturity date and do not need to be repaid, whereas bonds typically have a maturity date and must be repaid with interest.

Note that stocks may provide voting rights in corporate decisions, while bonds do not grant such rights to bondholders.

Understand that bonds typically pay fixed interest (coupon payments) to bondholders, while stocks do not guarantee any fixed payments; instead, stockholders may receive dividends, which are not guaranteed.

Compare the options provided in the question to identify the correct description of the major difference between stocks and bonds, focusing on ownership versus loan characteristics.