What is the difference between shares and bonds?

Whats the difference between convertible notes and company bonds?

• Hi guys I am doing a practise exam at home and I am just wondering, is the main difference between the two is that a CONVERTABLE NOTE is a Hybrid security (i.e. converts into ordinary shares at the end) and Company bonds is just debt which ends at maturity? Is there any other major differences? Cheers Paul

• Answer:

  You are right. That is the main difference. A Convertible Note is a type of coupon paying debt security that converts to the issuers ordinary shares (equity) at maturity. Generally speaking these securities pay a fixed (or floating) return until a certain date when the security can be converted into the underlying shares of the issuer. A Corporate Bond is a fixed interest investment, providing regular interest payment during the term of the bond, then returning your upfront investment at the fixed end date or maturity. There is such a thing as a Convertible Bond. You can read more about Hybrid Securities at the link.