Differentiate stock and bonds.

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.