explain the difference between a stock and a bond.

Debt Securities: Bonds: loan to the company for a predetermined period- company pays interest and repays bond once it matures- not like a stock because you do not get an ownership stake in the company. Can purchase newly issued, secondary market (they may trade at a lower rate if the company is not in position to meet financial obligations) or bond funds. Greatest benefit is stability-bonds tend to hold up across market volatility so long as issuing company is strong- but expense is lower returns usually Equity Securities: Stocks an ownership interest that carries with it legal rights. A dividend is a payment made to stockholders from corporate profit Common stock: Common stock represents an ownership interest in a corporation. Affords: 1 voting rights 2- participate in earnings 3-right to purchase additional shares (so that percentage is not diluted) Corporations can create different classes to give more voting rights to certain classes for example. Corporates may have buyback provisions- where they elect to buyback not to get acquired. Corporations may go private to consolidate control, because of a belief that the shares are undervalued, to increase flexibility, or because of a tender offer or hostile takeover