Shares and bonds are both financial instruments used to raise capital, but they differ in several ways:
1.Ownership: Shares represent ownership in a company, while bonds represent a loan to a company.
2.Return: Shareholders are entitled to a share of the company’s profits in the form of dividends and capital gains, while bondholders receive a fixed interest payment.
3.Risk: Shares are generally considered riskier than bonds because their value is tied to the performance of the company, while bonds provide a fixed return and are less likely to fluctuate in value.
4.Maturity: Bonds have a fixed maturity date, at which point the principal is repaid to the bondholder, while shares have no maturity date.
5.Priority: In the event of bankruptcy, bondholders have priority over shareholders in the repayment of their investment.
