1. Key Terms (a) What is the difference between a bond and a stock? (b) How does a dividend differ from a capital gain?
(c) Explain the difference between common stock and
preferred stock. (d) What makes a mutual fund an attractive
investing option?

(A) Stocks lend you a portion of a corporation's stock, while bonds are a loan from you to a firm or government. The main distinction between them is how they produce profit: securities must rise in value before being traded on the stock exchange, while most bonds pay fixed interest over time. (B)The disparity between your buying price and the value of the security when you sell it is referred to as a capital gain (or loss). A dividend is a payment made to shareholders from a company's income that is approved and announced by the board of directors. (C) The primary distinction between preferred and common stock is that preferred stock does not include owners with voting rights, while common stock does. Preferred shares get first dibs on a company's earnings, which means they receive dividends before common shareholders. (D) Mutual funds can invest in a wide range of securities, making them an appealing investment option. Diversification, convenience, and lower costs are some of the reasons why an investor can prefer to purchase mutual funds rather than individual stocks.

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explanation: