Answer to Question #248979 in Macroeconomics for Charlie

Question

why investors choose to invest in common stock despite them been riskier than bonds?

Answer 1

The main advantage of stocks over bonds is their tendency to generate higher returns. Stocks also offer investors who are willing to take great risks an opportunity to get benefits from rising stock prices. Investors can benefit from investing in divedend paying stocks where they will benefit from profits shared by corporates to its shareholders. In case someone does not want to take the dividends they can still re-invest them into the business as shares.