what is stock and bond
A bond (or as it is also called «bond» from the English. «bond») is a security that certifies the right of the owner to receive its nominal value with an interest in a pre-specified period of time. The process of obtaining income on bonds of comparable with the reception of the income on Bank deposits - and in fact, and in another case it is a question of a fixed percentage. But the bond is a significant advantage in front of the Bank contribution - the investor can ahead of time (up to maturity bonds) get their money back, without losing the yield.
what is stock and bond: the Main purpose for which the issuers (government, state and municipal bodies of the company) issue bonds, is the attraction of additional funds in the turnover. Issue of bonds is more profitable analogy of a Bank loan. Buying a bond, the investor as a matter of fact gives a loan (credit) issued their companies or the state. The state or the company shall undertake to return the borrowed money at a certain moment in the future with interest.
Issue of bonds is the second in terms of popularity with investors ' views of securities in Russia after the shares. Bonds have a low degree of risk, but also, as a rule, low-yield, because according to the regulation of the securities market, the yield is the pay for the risk. Bonds are attracted to the most conservative investors, for which for any reasons unacceptable risk and the main thing is to preserve capital, and not increase them. Income on bonds less subject to fluctuations and do not depend on a conjuncture of the market, as, for example, the income on the shares.
what is stock and bond: the Main differences between the bonds of shares:
•interest on bonds in the majority of cases is fixed; the size of dividends on shares of the (ordinary) can vary substantially (and sometimes not paid) in accordance with the results of the activity of the enterprise-Issuer;
•the interest on the bonds shall be paid within a strictly defined period specified by the terms of the loan; the shares of the same generate revenue unlimited period of time;
•income on bonds is usually lower, than on the shares, but the likelihood of it getting much higher;
•the interest on the bonds shall be paid in the first all, that is to payments of dividends on shares. If for some period of time the results of operations of the Issuer is not satisfactory, it is quite probable that the dividends on issued shares will not be paid. Claims under the bonds the Issuer shall carry out regardless of the results of economic activity. Specially for a rainy day «each of the Issuer, the Issuer of the bonds, shall create a reserve Fund, from which and will be implemented payment;
•bonds in contrast to the shares do not give the right to participate in the management of the company. Buying a share, the investor becomes one of the owners of the company-Issuer; buying bonds of this company, the investor becomes the creditor;
•in case of liquidation of the company-Issuer's in dividing the property of the shareholders can count only on the part of the property that remains after payment of all debts, including bonds.
