How do stocks and bonds differ as investments?

Answer 1

Stocks represent ownership in a company and can provide returns through capital appreciation and dividends, making them generally higher-risk investments with the potential for higher returns. Bonds, on the other hand, are debt instruments where investors lend money to an entity for interest payments and the return of principal at maturity, typically offering lower risk and more stable income. While stocks can fluctuate significantly in value, bonds tend to be more stable and less volatile. Investors often choose between them based on their risk tolerance, investment goals, and market conditions.