What is the difference between stocks, bonds, futures, options and derivatives?
In: Economics
Stocks = ownership of a company, and a claim to its earnings and assets.
Bonds = corporate/government version of an IOU, that pays a fixed rate of interest at fixed intervals.
Futures = agreements between two parties that stipulates a standardized amount of some commodity (oil, for example) will be transacted at a later point in time, at a certain price.
Options = another form of derivatives. Like futures, options stipulate that a certain amount of stock will be transacted at a certain price at a certain point in the future.
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