Difference Between Stocks and Bonds

Stocks Bonds

Equity financing Debt financing

Represent Represent debt of

ownership of company

company

Stockholders can Bondholders have no

vote voting rights

No maturity, no Obligation for firm to

obligation for firm repay bond holders

to repay owners. when bond matures

Market determines

Value of stock/shares

Dividends paid Interest due at

If and when declared stated intervals

Dividends are paid Interest is an expense

from after-tax and is tax deductible

profits for the firm