what are "penny stocks" and "junk bonds"? what is the difference?
- JudyLv 72 months agoFavorite Answer
A stock is partial ownership in a company. Penny stocks are low priced stocks often issued by startups, most of whom end up failing, normally bought in hundreds or thousands of shares at time. A bond is a loan to the company. Junk bonds have a poor chance that the loan will be paid back.
- Anonymous2 months ago
Both are very risky and not for people that are investing. More like speculating.
- SteveLv 62 months ago
You should always go to investopedia.com to search for stock market related terms.
- Coffee DrinkerLv 72 months ago
Well, for starters penny stocks are stocks and junk bonds are bonds. If you don't know the difference between stocks & bonds you probably shouldn't be investing in things as risky as penny stocks and junk bonds.
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- A nobodyLv 72 months ago
"Junk Bonds" are, like all other bonds, are debt securities that are issued by corporations and/or municipalities to raise money. The issuer issues the bond in exchange for cash so that they will have operating or investment monies, for a defined period of time or until the bond proceeds are returned to the lenders. For lending money, the bond holders usually receive periodical interest payments. Bonds are rated as to their performance in repaying interest and/or principal. When performance is not that good, the lower the rating. Bonds with no or low ratings are considered "junk" bonds...
Penny stocks are stocks that have a market price of less than $5 per share. Stocks selling less than $5 have no loan value for margin or used for collateral. So too, firms that carry such stock in inventory are penalized 100% of their market value. They have the same value of $.01 stock.Source(s): from The Street
- Spartacus!Lv 72 months ago
stocks are equities, bonds are debt. Penny stocks are stocks that trade for under a dollar, which can be for many reasons but most often because the company is doing poorly. Junk bonds are bonds with low ratings, for reasons comparable to most penny stocks.
- 2 months ago
It really doesn't matter. Both are not worth your time unless you know something about the company that others do not.
- regeruggedLv 72 months ago
Stocks are part ownership of a corporation. the penny part means the value of the stock is under $1.00 per share. Junk bonds are debt sold by corporations. The issuer has to pay dividends regardless of the financial status of the company. Junk means the lowest rated bond. Higher dividends are paid, but the risk of default is great.