Economics Bonds Questions
The main difference between a bond and a stock is the nature of the investment.
A bond is a debt instrument issued by a company or government entity to raise capital. When an investor purchases a bond, they are essentially lending money to the issuer in exchange for regular interest payments and the return of the principal amount at maturity. Bonds are considered fixed-income securities as they provide a fixed interest rate over a specific period of time.
On the other hand, a stock represents ownership in a company. When an investor buys a stock, they become a shareholder and have a claim on the company's assets and earnings. Unlike bonds, stocks do not have a fixed interest rate or maturity date. Instead, investors can potentially earn returns through dividends (share of company profits) and capital appreciation (increase in stock price).
In summary, bonds are debt instruments that provide fixed income, while stocks represent ownership in a company and offer potential dividends and capital gains.