Final answer:
The return an investor receives from buying stocks or bonds is independent from the cost of the security to the issuing company. A company receives funds only during the initial offering of stocks, not from subsequent trading. With bonds, returns are associated with the cost of capital for the company.
Step-by-step explanation:
The return an investor in a security receives is independent of the cost of the security to the company that issued it. Most of the time, when corporate stock is bought and sold, the firm that originally issued the stock receives no financial return. After the initial issuance, the shares are bought and sold between investors, and the price of these transactions doesn't affect the issuing company's finances. For example, if you buy shares of General Motors stock, the transaction typically involves you and the current shareholder, not General Motors itself. In the stock market, the company only receives funds during the initial public offering (IPO) or other such stock issuance events, not from subsequent trading.
In contraposition, buying bonds from a company usually involves lending money directly to the issuing company, offering investors a rate of return which can include components such as compensation for delaying consumption, an inflation adjustment, and a risk premium. This rate of return is closely tied to the cost of capital for the company issuing the bond.