Best Answer

Stocks (aka Equities): Stocks represent partial ownership of a corporation. If the corporation does well, its value increases, and you share in the appreciation. However, if the corporation goes bankrupt, you can lose your entire initial investment.

Bonds (aka Notes): Bonds represent a loan you make to a corporation or government. For example, you can buy a US Treasury bond for $100, and get a guaranteed interest rate for 5-years, and can expect to get your $100 back at the end of that 5-years plus interest. Your risk is repayment of the principal (amount invested). Because loaning $100 to the U.S. government is much less risky than loaning $100 to the Brazilian government, U.S. government bonds pay a much lower rate of interest ("coupon") for borrowing your money. Stocks and Bonds .... How do they differ Stocks are EQUITY. They represent shares of ownership in a Corporation. A Stockholder is actually one of many owners of a Publicly Owned Corporation. If a Corporation dissolves for any reason owners of Common Stock (the main type of stock issued) receive the value of the sold assets of the Corporation AFTER everyone else is paid, including the IRS, Employees, Bonds, Accounts Payable, etc.

Bonds are DEBT. They are sold by the Corporation in order to raise money for various purposes for use by the company. Bonds offer an interest rate to the Bondholder for the period of time that the Bondholder owns the bonds.

Since bonds do not represent ownership, the bondholder could lose their investment if the Corporation dissolves, but are paid BEFORE owners of stock.

When you buy either bonds or stock, you pay money now with the possibility of getting more money later. But a bond represents a debt--the company that issued the bond owes you money to be paid when the bond is redeemed. A stock represents ownership. As a stockholder, you become a part owner of the company.

Stocks, compared to bonds, have which of the following characteristics?


A. No guarantees

User Avatar

Wiki User

โˆ™ 2015-12-02 10:49:13
This answer is:
User Avatar
User Avatar

Marissa Tharp

Lvl 1
โˆ™ 2021-10-18 15:54:54
Study guides

Investing and Financial Markets

32 cards

What is the Gold Standard

What is Standard and Poors

What is a prospectus

What is a NOW account

See all cards
More answers
User Avatar


Lvl 4
โˆ™ 2020-12-01 11:26:35

No maturity date.

User Avatar

Add your answer:

Earn +20 pts
Q: What is the difference between stocks and bonds?
Write your answer...
Related questions

What is the difference between stocks bonds and shares?

what is the difference between stocks,shares and bonds

Difference between stocks and bonds?

stocks are stocks and bonds are bonds . flatout -ashes

What distinguishes stocks from bonds?

The only difference between the 2 is that a stock represents ownership and a bond is a long term debt. You will be paid via stocks but only receive interest from bonds.

What is the difference between penny stocks and cent stocks?

There is no difference between penny stocks and cent stocks.

What is the basic difference between a stock and a bond?

1)stocks are in units, whereas bonds are for number of years. 2)stocks are the number of units for the companies whereas bonds can be for short or long term

Difference between bonds shares and mutual funds?

The difference between bonds shares and mutual funds is in their definition. Bond shares refers to the individual shares that an investor owns in a company while mutual fund is the collection of all the stocks and shares in a company.

Do corporations issue stocks and bonds?

They do in fact issue stocks and bonds.

What investment has the lowest risk and lowest rate of return between savings bonds stocks collectibles or real estate?


Nonpolar bonds show what electronegativity difference between atoms?

Nonpolar bonds show a Low electronegativity difference between atoms

Difference between capital and money market?

Capital market is stock exchange. It trades stocks and bonds. Money market's main object of trading is curency.

Compare and contrast stocks and bonds as investment instruments?

Stocks are investments in individual companies. Bonds are investments in government agencies such as cities and municipalities. Stocks are generally riskier than bonds, but bonds have a lower yield.

What is more risky stocks or bonds?


What is the difference between metals and ionic bonds?

the difference between ionic bonds and meals is that metals are able to be bent and ionc bonds cant bend without breaking

What is the difference between physical assets and financial assets?

A physical asset is something tangible that is owned such as equipment, cash, and inventory. Financial assets refer to things such as stocks and bonds, which have value but are not tangible.

Which earns interest stocks or bonds?


Will long term debt increase when you issue stocks and bonds?

When a company issues bonds, yes. Stocks, no.

What is the difference between end bonds and side bonds?

Side bonds cross and end bonds join.

What happens to stocks and bonds after the stockholder dies?

They become part of the deceased persons estate If the decedent had a will, the stocks and bonds pass on to the wills beneficiaries If there was no will, the state intestacy laws determine who gets the stocks and bonds

Where can a person go to get tips on stocks and bonds?

Many websites that deal with investments of stocks and bonds will provide tips on them. Websites such as Daily Finance, Stock Twits, and Learn Bonds will give many useful tips for picking the right stocks and bonds.

Difference between financial market and commodity market?

The commodities market IS a financial market. The difference is, in the commodities markets futures contracts on commodities are traded, and the other financial markets trade whatever they're formed to trade, usually stocks and bonds.

Difference between covalent and ionic bonds?

Covalent bonds are formed by sharing of valence electrons and ionic bonds are formed by electrostatic bonds between ions.

What is the difference between stocks and mutual funds?

The major difference between stocks and mutual funds is that stocks are an investment in a single, individual company, while mutual funds are made up of many stocks and are typically managed by a broker. Mutual funds are generally considered safer investments than stocks, as they reduce the risk of lost, but also reduce the chance of gain.

Can stocks and bonds be purchased through the financial market?

Stocks and bonds can be purchased via one's bank. There are also companies that offer online trading where one can buy stocks and bonds. These include Hargreaves Lansdown, for example.

Which is more liquid stocks bonds?

Stocks are considered much more liquid than bonds. This is because stocks are riskier and the value of the stock is determined by the present market.

What is the difference between Tier I and Tier II Bonds?

Tier I and Tier II bonds are basically the same. Tier I bonds are a banks receipts and stocks. Tier II is limited to only 100 percent of the total amount of Tier I. The Tier II bonds can include other assets besides bank receipts and shares of stock, but cannot exceed Tier I totals.

People also asked

When Compared to basic savings accounts CDs are liquid and have interest rates?

View results

When it comes to interest most CDs will allow?

View results

What is the savings account offering which of these APRs and compounding periods offers the best ARY?

View results