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Characteristics of bonds and equities

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Rachet B.
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  1. Introduction
  2. Characteristics of Equities
  3. Distinguishing features of bonds
  4. Conclusion

Year on year, plenty of individuals embracing investment in financial instruments and assets for the first time, have increasing cases of reported withdrawals citing dissatisfaction and continual failure to pace their portfolio diversification to the transforming financial market. Often, the frustration emerges from the complexity in aligning the portfolio components to an individual's investment goals while sustaining attention to the potential of risk that may intimidate the investor confidence. Contrary to the popular thinking that an investor has the capability to make a killing in the financial market in a short period, such sudden gains are similarly wiped out in sudden loss of equal magnitude. Nevertheless, committing to longer investment terms is never enough to guarantee investment success in financial instruments. Building an investment portfolio demands understanding the existence of different kind of financial assets and developing the investment strategy based on the investor's own goals and ascertained financial situation. Although investing in financial assets is geared to wealth maximization, the ultimate choice and proportion associated between bonds and equities is dependent on the investor's age, preferences, risk appetite and the distinguishing features.

[...] Additionally, bonds are subject to credit risk rating systems. For instance, a bond earmarked with a rating of AAA of a blue-chip issue exists in the highest ranking and exhibits the likelihood of timely repayment of the full amount. The bond rating feature using notable rating agencies including Moody's, Standard and Poor's, and Fitch system, assist the investors determine the particular risks attributable to each company's credit risk. It facilitates in determining the credit quality as the distinguishing feature of junk status as not all bond investment has inherent safety, as some are riskier than the unpredictable stocks (McGagh, 2013). [...]


[...] The Impact of Interest Rates on Bond Investments. Retrieved August from http://www.schwab-global.com/public/schwab-gcben/advice_and_research/market_insight/investing_strategies/bonds/impact_of_interest_ra tes_on_bond_investments.html 12 Williams, R. T. (2012). An Introduction to Trading in the Financial Markets SET. San Diego: Elsevier Science . [...]


[...] Share and Debenture Holders. Retrieved August from http://investor.sebi.gov.in/Reference%20Material/sharedebentureholder.pdf Singhvi, N. M., & Bodhanwala, R. J. (2006). Management accounting : text and cases. NewDelhi: Prentice-Hall of India. Strong, R. A. (2009). Portfolio Construction, Management, and Protection. Mason, Ohio: SouthWestern Cengage Learning. Williams, R. (2013, November 25). [...]


[...] Munich: GRIN Verlag,. Brigham, E. F., & Ehrhardt, M. C. (2011). Financial Management; Theory and Practice. Mason: South-Western Cengage Learning. Brigham, E. F., & Houston, J. F. (2009). Fundamentals of Financial Management (12 ed.). Mason, OH: South-Western Cengage Learning. Brown, J. [...]


[...] Singapore: J. Wiley & Sons . Norsk Tillitsmann ASA. (2009). Bond Agreement between Renewable Energy Corporation ASA and Norsk Tillitsmann ASA. Retrieved August from http://www.recgroup.com/PageFiles/3126/L%C3%A5neavtale%20NO0010536501_LA.p df Porter, G. A., & Norton, C. L. (2009). Financial Accounting The Impact on Decision Makers. South-Western Publishers. Pradesh, M., Goa, C., & Haveli, D. N. (n.d.). [...]

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