Stock and bond are the two main categories of assets investors use. While stocks represent an ownership interest in a corporation, bonds are long-term debts, in which the issuing corporation has to pay the principal amount by a given date. Stocks pay dividends to the owners only if the corporation declares a dividend, while bonds pay interest rate to the bondholders. Stocks can be bought and sold, while in case of bonds, they make the owner a lender. In other words, stock is a piece of corporation signifying partial ownership in the company, while bond is a loan to a corporation. Stocks are issued in a way that it finances the company without going into debt, whereas a bond must be repaid by the issuer and it represents debt. Stocks are traded in secondary exchanges, whilst the value of bonds is determined by the interest rate.
