If you buy a company’s bond, which of the following statements are true?
1. You own a part of the company.
2. You have lent money to the company.
3. You can vote on shareholder resolutions.
4. All of the above.
Answer:
2. Bonds are loans that investors make to a corporation or government body in exchange for regular interest payments and the return of principal at a future date. Companies issue corporate bonds to raise money for capital expenditures, operations, and acquisitions. Unlike stockholders, however, bondholders have no ownership rights in the corporation.
