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I just learned what bonds are. They seem similar to stocks, but different in key ways. I'd like to know all the ways. I'll list the differences that I currently believe they have. The only reason I'm comparing them to begin with is that they're both a kind of investment.

  1. Stocks give the stock-owner ownership of the company the stocks belong to. Bonds do not do this.
  2. Stocks can be bought at any time, bonds can be bought when a company/institution issues them.
  3. Stocks can be sold at any time, whereas bonds aren't sold; they're paid back, at a fixed time.
  4. The value entered into a company when stocks are bought, can be used for anything, whereas the value entered into a company/institution when bonds are bought, is used to finance whatever the bonds were issued for.

So, my question is this: what other differences are there, and are those listed correct?

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    $\begingroup$ Point 2, 3 are not strictly correct as there are secondary markets for bonds also. Point 4 is also not always applicable as companies / govts do not necessarily state the purpose of taking debt. And another important difference between the two is risk. $\endgroup$
    – Dayne
    Commented Mar 1, 2022 at 4:01
  • $\begingroup$ @Dayne By 4, I didn't mean that the bond-buyer necessarily knows what the bonds are being used for, I was only saying that the bonds were being used for something particular, whereas the value stocks provide can go into anything. Basically, the difference I'm talking about is that the purchase of stocks is directly caused by the choice of stock-buyer (and indirectly caused by lots of things), whereas the purchase of bonds is directly caused by their issuing and the bond-buyer's choice. This means there's a difference in causation, which usually means the bonds go into something particular. $\endgroup$
    – user110391
    Commented Mar 1, 2022 at 4:05
  • $\begingroup$ Stocks also directly go into something particular. The whole idea of an IPO or secondary offering is to raise capital. Bonds can be and are traded all the time on the secondary market, although this is frequently not on an exchange but OTC for bonds. Personally, I think it makes little sense to compare them for the reason you stated (they are both an investment ; for you I assume, because for the firm it's financing). Oil can also be an investment, sometimes a very good one, but I doubt there is much similarity to bond or stocks. $\endgroup$
    – Alex
    Commented Mar 1, 2022 at 10:59

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