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Differentiate stock and bonds.
The major differences between stock and bonds are as follows −
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.
Traded through central exchanges.
Shareholders get voting rights.
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).
Traded over the counter (OTC).
Liquidation and preferences in terms of repayment.
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