Please Answer Each Question In No More Than 3-4 Sentences

1 Please Answer Each Question In No More Than 3 4 Sentencesa Explai

1. Please answer each question in no more than 3-4 sentences. a) Explain what is a bond and why would investors invest in a bond? b) What is the difference between a coupon rate and the rate investor’s expect? c) What is the difference between the par value and the market or present value? d) What kind of payments would an investor get if they invest in bonds and in preferred stocks? Please explain your answer.

Paper For Above instruction

A bond is a fixed-income security that represents a loan made by an investor to a borrower, typically government or corporate entities. Investors buy bonds to earn regular interest income and to preserve capital, especially when predicting stability or relatively lower risk compared to stocks. The coupon rate is the fixed annual interest rate paid by the bond issuer based on the bond's face value, while the rate investors expect reflects the current market's required rate of return, which may fluctuate due to interest rates or credit risk. Par value, or face value, is the amount paid back to the bondholder at maturity, whereas market or present value is the current price of the bond in the marketplace, which can differ from the par value depending on market conditions. When investing in bonds, an investor receives periodic interest payments, known as coupons, and the return of the principal amount at maturity; in contrast, preferred stocks provide fixed dividends, which are paid before common stock dividends but do not typically offer a maturity date or repayment of principal.

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