Answer
Investments in bonds are made by investors to earn afixed amount of interest and investment in the stock of the company are made to have the ownership in the company and earn dividend income from the same.
Work Step by Step
Bonds are the debt instruments and must be paid at the end of maturity to the bondholder as it is treated as a loan but stocks are issued in order to raise capital and they will get dividend only when the company earns a profit or by way to capital gain.
Bonds are issued in order to raise the money for a company without diluting the ownership of current stockholders of the company while shares are issued to increase the capital for the business.
The differences between a stock and a bond are mentioned below-
1) People who buy Bonds are lending money to the company, Company utilizes the money for business operations. However, the stocks are bought in order to make money by capital gain or a way of dividends.
2) Bonds are less risky as they will get interested amount at a fixed rate on the bonds while stocks are only paid out of profit.
