Distinguish, differentiate, compare and explain what is the difference between Stocks and Bonds. Comparison and Differences.
Differences between Stocks and Bonds
| S.No. | Basis of difference | Stocks | Bonds |
| 1 | Meaning | An Equity Instrument representing an ownership interest in a corporation. | A Debt Instrument with a promise to pay back the principal amount with interest. |
| 2 | Who Are the Issuers? | Corporates | Government Institutions, Financial Institutions, Companies etc. |
| 3 | Major Risks Associated | Market Risk, Business Risk. | Interest Rate Risk, Inflation Risk. |
| 4 | Status of Holders | Shareholders are the owners of the company. | Bondholders are the lenders to the company. |
| 5 | Risk Level | High since it depends upon the performance of the issuer so no guaranteed returns. | Relatively low since bondholders are prioritized for repayments. |
| 6 | Additional Benefit | Shareholders get the right to vote. | Bondholders get the preference in terms of Repayment and also on liquidation. |
| 7 | Form of Returns | Profits earned by the company are paid in the form of Dividends. | Interest payments are made in the form of Coupon Payments. |
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Difference between Bonds vs Stocks
Stocks vs Bonds
Differences between Bonds vs Stocks
