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[link] shows bond yield for two kinds of bonds: 10-year Treasury bonds (which are officially called “notes”) and corporate bonds issued by firms that have been given an AAA rating as relatively safe borrowers by Moody’s , an independent firm that publishes such ratings. Even though corporate bonds pay a higher interest rate, because firms are riskier borrowers than the federal government, the rates tend to rise and fall together. Treasury bonds typically pay more than bank accounts, and corporate bonds typically pay a higher interest rate than Treasury bonds.

Interest rates for corporate bonds and ten-year u.s. treasury bonds

The two lines on the graph show that interest rates of corporate bonds and 10-year U.S. Treasury bonds tend to rise and fall at similar times. Corporate bonds, however, have always maintained a higher interest rate than 10-year U.S. treasury bonds.
The interest rates for corporate bonds and U.S. Treasury bonds (officially “notes”) rise and fall together, depending on conditions for borrowers and lenders in financial markets for borrowing. The corporate bonds always pay a higher interest rate, to make up for the higher risk they have of defaulting compared with the U.S. government.

The bottom line for bonds: rate of return—low to moderate, depending on the risk of the borrower; risk—low to moderate, depending on whether interest rates in the economy change substantially after the bond is issued; liquidity—moderate, because the bond needs to be sold before the investor regains the cash.

Stocks

As stated earlier, the rate of return on a financial investment in a share of stock can come in two forms: as dividends paid by the firm and as a capital gain achieved by selling the stock for more than you paid. The range of possible returns from buying stock is mind-bending. Firms can decide to pay dividends or not. A stock price can rise to a multiple of its original price or sink all the way to zero. Even in short periods of time, well-established companies can see large movements in the price of their stock. For example, in July 1, 2011, Netflix stock peaked at $295 per share; one year later, on July 30, 2012, it was at $53.91 per share; in 2015, it had recovered to $414. When Facebook went public, its shares of stock sold for around $40 per share, but in 2015, they were selling for slightly over $83.

The reasons why stock prices fall and rise so abruptly will be discussed below, but first you need to know how we measure stock market performance. There are a number of different ways of measuring the overall performance of the stock market, based on averaging the stock prices of different subsets of companies. Perhaps the best-known measure of the stock markets is the Dow Jones Industrial Average, which is based on the stock prices of 30 large U.S. companies. Another gauge of stock market performance, the Standard&Poor’s 500, follows the stock prices of the 500 largest U.S. companies. The Wilshire 5000 tracks the stock prices of essentially all U.S. companies that have stock the public can buy and sell.

Other measures of stock markets focus on where stocks are traded. For example, the New York Stock Exchange monitors the performance of stocks that are traded on that exchange in New York City. The Nasdaq stock market includes about 3,600 stocks, with a concentration of technology stocks. [link] lists some of the most commonly cited measures of U.S. and international stock markets.

Questions & Answers

what is monopoli power
Adzaho Reply
the situation that prevails when economic forces balance so that economic variables neither increase nor decrease
Bombey
what is equilibrium
Kabir
what are the important of economic to accounting students with references
salihu Reply
Economics is important because it helps people understand how a variety of factors work with and against each other to control how resources such as labor and capital get used, and how inflation, supply, demand, interest rates and other factors determine how much you pay for goods and services.
Muhammad
explain the steps taken by the government in developing rural market?
Azeem Reply
contribution of Adam smith in economics
abel Reply
I will join
Dexter
I will join
Patrick
Hey
Fatima
Hey
Amir
Hello
AS
hey
Umarou
I love this book and i need extra Economic book
Amir
Hey
Amir
what's happening here
AS
I love this book and i need extra Economic book
Amir
what is the meaning of function in economics
Effah Reply
Pls, I need more explanation on price Elasticity of Supply
Isaac Reply
Is the degree to the degree of responsiveness of a change in quantity supplied of goods to a change in price
Afran
what is production
Humaira
Okay what is land mobile and land unmobile
scor
And what are the resources in land
scor
what is production
Humaira
the proces of using the services of labor and equipmnt together with other in puts to make goods and services availble
Bombey
Okay what is land mobile and land unmobile
scor
Discuss the short-term and long-term balance positions of the firm in the monopoly market?
Rabindranath Reply
hey
Soumya
hi
Mitiku
how are you?
Mitiku
can you tell how can i economics honurs(BSC) in reputed college?
Soumya
through hard study and performing well than expected from you
Mitiku
what should i prepare for it?
Soumya
prepare first, in psychologically as well as potentially to sacrifice what's expected from you, when I say this I mean that you have to be ready, for every thing and to accept failure as a good and you need to change them to potential for achievement of ur goals
Mitiku
parna kya hai behencho?
Soumya
Hallo
Rabindranath
Hello, dear what's up?
Mitiku
cool
Momoh
good morning
Isaac
pls, is anyone here from Ghana?
Isaac
Hw s every one please
Afran
Ys please I'm in Ghana
Afran
Hello
OLANIYI
pls anyone from Nigeria
OLANIYI
am a new candidate here, can someone put me 2ru
OLANIYI
hello
OLANIYI
Pls economic A level exam tomorrow pls help me
akinwale
am from Ghana
Jacob
hi
Charles
Pls economic A level exam tomorrow pls help me
akinwale
Hi
Dev
bol Diya discuss ab krega v
Dev
hello Mr. Rabindranath
Dev
what do you want Dimlare
Dev
yes tell me your desire to have it
Dev
to have what?
OLANIYI
Good luck
JOSEPH
I want to know about economic A level tomorrow pls help
Lerato
okay
Umarou
okay
Umarou
hi
Humaira
hi
Liaqat
what is firms
Anteyi Reply
A firm is a business entity which engages in the production of goods and aimed at making profit.
Avuwada
What is autarky in Economics.
Avuwada
what is choice
Tia Reply
So how is the perfect competition different from others
Rev Reply
what is choice
Tia
please what type of commodity is 1.Beaf 2.Suagr 3.Bread
Alfred Reply
1
Naziru
what is the difference between short run and long run?
Ukpen Reply
It just depends on how far you would like to run!!!🤣🤣🤣
Anna
meaning? You guys need not to be playing here; if you don't know a question, leave it for he that knows.
Ukpen
pls is question from which subject or which course
Ada
Is this not economics?
Ukpen
This place is meant to be for serious educational matters n not playing ground so pls let's make it a serious place.
Docky
Is there an economics expert here?
Docky
Okay and I was being serous
Anna
The short run is a period of time in which the quantity of at least one inputs is fixed...
Anna
that is the answer that I found online and in my text book
Anna
Elacisity
salihu
Meaning of economics
Suraj Reply
It will creates rooms for an effective demands.
Chinedum Reply
different between production and supply
babsnof
Hii
Suraj
hlo
eshita
What is the economic?
Suraj
Economics is a science which study human behavior as a relationship between ends and scarce means which has an alternative use.
Mr
what is supply
babsnof
what is different between demand and supply
Debless Reply
Demand refers to the quantity of products that consumers are willing to purchase at various prices per time while Supply has to do with the quantity of products suppliers are willing to supply at various prices per time. find the difference in between
Saye
what is demand
Humaira
demand is a relationship btn the price of an item and the quantity demanded
Bombey

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Source:  OpenStax, Principles of economics. OpenStax CNX. Sep 19, 2014 Download for free at http://legacy.cnx.org/content/col11613/1.11
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