Business and the capital structure(fin 100)
The historical relationship between risk and return for common stocks versus corporate bonds can be summarized as follows:
Common stocks have historically provided higher returns with higher risks than corporate bonds. This is due to the fact that common stockholders are owners of a company, which gives them more potential upside in terms of growth and profits, but also more potential downside in terms of losses if the company performs poorly. Corporate bonds on the other hand are debt instruments that provide lenders with fixed interest payments over time, so the returns are more predictable but tend to be lower. The overall risk associated with investing in either type of security is dependent on individual circumstances such as market conditions and investor goals.
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