Difference between Stocks and Bonds
|
Basis |
Stocks |
Bonds |
|---|---|---|
|
Meaning |
Stocks represents ownership in a company or an entity. |
Bonds are debt securities issued by governments, municipalities, or corporations to raise capital. |
|
Type of Instrument |
Stock is an equity investment. |
Bond is a debt instrument. |
|
Ownership |
Stocks represents ownership in a company. |
Bonds represents a loan. |
|
Income |
Income from stocks is usually generated through dividends. |
Income from bonds is usually earned through interest or coupon rates. |
|
Risk |
There is higher risk in stocks due to market fluctuations. |
Risk in bonds is less as compared to stocks. |
|
Maturity |
There is no maturity date in stocks. |
Bonds have a fixed maturity date. |
|
Priority in Claims |
In case of bankruptcy, stocks are given lowest priority. |
In case of bankruptcy, bonds are given highest priority. |
|
Market Influence |
Stocks are affected by company performance, economic factors, and investor sentiment |
Bonds are affected by interest rates, creditworthiness of issuer, and economic conditions. |
Difference between Stocks and Bonds
Stocks and Bonds are both common types of investments, but they represent different ways of investing in a company. Stocks, also known as equities, represent ownership in a company; whereas, Bonds are debt securities issued by governments, municipalities, or corporations to raise capital.