Answer to Question #175113 in Financial Math for Kim Galvez

Question

II. In your own understanding, explain the following terms: 

 

1. bonds

2. stocks

3. mutual funds

Answer 1

When an investor buys a stock, part ownership in the form of a share is bought. Bonds are a type of investment designed to aid governments and corporations to raise money. In a mutual fund, money collected from various investors is taken together to buy a large variety of securities.