This number gets plugged into the balance sheet under owner’s equity. Consequently, they result in the reduction of the total balances of the balance sheet. On the other hand, stock dividends are given in the form of additional shares to the existing shareholders. This distribution does not have any effect on the overall total of the balance sheet. Instead, the issuance of dividends is a distribution of profits to shareholders. After you deduct taxes, whatever is left is the net income—also k...

Likewise, if interest rates soared to 15%, then an investor could make $150 from the government bond and would not pay $1,000 to earn just $100. This bond would be sold until it reached a price that equalized the yields, in this case to a price of $666.67. The price of a bond changes in response to changes in interest rates in the economy. The bond issuer may include a put option in the bond that benefits the bondholders in return for a lower coupon rate or to induce the bond sellers to make the...