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In bond valuations there are more quantifiable attributes to be used than in stock valuations. For bonds, you have predetermined cash payments, exact maturity or call date, and assessments from rating agencies with respect to insolvency risks. In stocks, there is no maturity, dividends change or are nonexistent, and earnings very over time. This is why mathematical discounted cash flow models work better for bonds than for stocks. Analysts, however, use these models for both. For stocks probaly the most commonly used method is comparison of Price to Earnings ratios among comparable companies.

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Q: Why are stocks harder to value than bonds?
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Related questions

Are stocks riskier investment than bonds?

Yes, you can lose a stock, and you can lose a bond, but bonds are harder to lose, and can never decrease in value.


Which is more liquid stocks bonds?

Stocks are considered much more liquid than bonds. This is because stocks are riskier and the value of the stock is determined by the present market.


Why does stock have more potential for higher returns than bonds?

Bonds can be bought with set interest rates, meaning as time goes by, its yearly value goes up at a steady rate. Stocks, however, can jump up and down in value, depending on market value.


Why buys bonds and not stocks?

Bonds and stocks serve different purposes to the investor, and ideally you should buy both. Advantage of investment-grade bonds: the issuer is committed to paying you a stated amount of money on a stated date. The disadvantage is your return is limited to the agreed-on amount. Advantage of stocks: potentially unlimited return on your investment. The disadvantage is there are no guaranteed returns with stocks; you could potentially lose everything you invested in them. Speculative-grade bonds, or "junk bonds," have a risk/reward system more like stocks than investment-grade bonds.


Why are federal securities such bonds popular with investors?

Federal securities such as bonds are popular with investors because it is safer than stocks. It also yields higher interest rates per year than other instruments such as T-bills or stocks.


Why are federal securities such as bonds popular with investors?

Federal securities such as bonds are popular with investors because it is safer than stocks. It also yields higher interest rates per year than other instruments such as T-bills or stocks.


When bonds are sold for more than their face value the carrying value of the bonds is equal to What?

It prorated in it's decrease to face value


When the bonds are sold for more than their face value what is the carrying value of the bonds is equal to?

the face value plus the unamortized premium.


Why do investors buy corporate bonds?

Most investors tends to buy corporate bonds cause its risky thus the rate of return are grater than those of government bonds most of the time, while bonds are much more safer than most stocks.


What is a group of stocks bonds or money market securities from more than one group called?

Mutual funds


Are bonds really safe?

There is a variety of bonds available. Some are safer than others. The same as stocks and shares. You can purchase some bonds that guarantee certain returns. I recommend you speak to a financial adviser.


What Country Day's had 155000. CDs pay 5.75 interest bonds 3 interest and stocks 6.8 interest. They invest 50000 more in bonds than in CDs. annual income investments is 7912.5. invested in each vehicl?

DC: 15000Bonds: 65000 Stocks: 75000.