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What is the difference between bonds and stocks?

What is the difference between stocks and bonds?

  • By issuing stock you will able to raise money without increasing debt on a balance sheet; by applying bonds, debt will increase...?

  • Answer:

    Stocks represent part ownership in a company. It signifies that you are a co-owner of a co. Bonds represent borrowing in a company. If you have invested in bonds, you have lent money to a company. As a shareholder, you are entitled to the remaning profits of a company, after payment of interest and taxes of a company. As a bondholder, you are entitled to repayment of principal and interest promised, and not anything more.

Ramamurthy Guruvayurappan at Quora Visit the source

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A stock is basically an  equity whereas a bond is a debt financial instrument. Simply speaking Bonds provide a certainity about your capital growth by a specific interest percentage ususally laid down in the terms and conditions - Also refered to as Fixed Income). Since it provides lower risk it has a cap on the return limit as mentioned. Stocks on the other hand provide you with a stake in the company have a greater risk since returns are never guaranteed hence pretty volatile. I would encourage you to watch a few videos here: https://www.khanacademy.org/economics-finance-domain/core-finance/stock-and-bonds

Angad Singh

Owner vs debtor. Stock holders own a portion of a company. Bond holders own a portion of their debt. Typically in a bad situation bond holders have a higher grip on assets whereas most stock holders lose out.

Jordan Jones

Stocks are an equity instrument - you own a piece of the company. Bonds are a debt instrument - you have loaned the company money, and they owe you a debt. There are a few other differences, the most important is that bonds are higher on the capital structure than stock, and in the case of a liquidation event, bondholders are paid back before stockholders.

Thomas Miller

http://www.investopedia.com/video/play/stocks-versus-bonds/ This ought to be sufficient. Next time try googling it before posting a question here.

Yaman Arora

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