Differentiate stock and bonds.

Banking & FinanceManagementCompanies/Organisations

The major differences between stock and bonds are as follows −

Stock

  • Partial ownership of a public limited company is provided in exchange of monetary value.

  • Known as stockholders.

  • No guarantee of return on investment.

  • No fixed profit on investment.

  • Return earned in terms of dividends.

  • Generally purchased through stock exchange.

  • High risk on investment.

  • Maturity time depend on investors.

  • Equity.

  • Traded through central exchanges.

  • Shareholders get voting rights.

Bond

  • Borrowed capital for an institution or organization.

  • Known as bondholders.

  • Guaranteed return on investment.

  • Fixed profit earned.

  • Return earned in terms of interest.

  • Generally issued by government institutions, financial institutions, public undertakings, private institutions.

  • Very low risk on investment.

  • Fixed time of maturity (at time of purchases).

  • Debt.

  • Traded over the counter (OTC).

  • Liquidation and preferences in terms of repayment.

raja
Published on 24-Jul-2020 10:45:44
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