Whereas stocks give investors part ownership of a company, bonds are loans made by investors to corporations or governments. Rather than benefiting from company profits the way that stock holders do, bond holders receive a fixed rate of return – a percentage of the bond’s original offering price. The return is called the ‘coupon rate’. Bonds have a maturity date at which time the principal amount is returned. Bonds can be issued for any period of time – some take up to 30 years to mature.
stocks versus bonds
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