Stocks |
Bonds |
Stocks represent ownership. |
Bonds represent debt. |
Common stocks do not have a fixed dividend rate. |
Interest on bonds must always be paid, whether or not any profit is earned. |
Stockholders can elect a board of directors, which controls the corporation. |
Bondholders usually have no voice in or over management of the corporation. |
Stocks do not have a maturity date; the corporation does not usually repay the stockholder. |
Bonds have a maturity date on which the bondholder is to be repaid the face value of the bond. |
All corporations issue or offer to sell stocks. This is the usual definition of a corporation. |
Corporations need not issue bonds. |
Stockholders have a claim against the property and income of a corporation after all creditors’ claims have been met. |
Bondholders have a claim against the property and income of a corporation that must be met before the claims of stockholders. |