DISTINGUISH BETWEEN BONDS AND SHARES

DISTINGUISH BETWEEN BONDS AND STOCKS
1 / Definition:
Bonds: A type of securities that recognizes the form of debt. Bonds is different from other forms
of debt, they are likely to be traded. In bonds, the debtor only released one type of securities.
Stocks: are documents allocated to shareholders of a shareholding company to confirm their
share in the company. Stocks can be transferred.
2 / Difference between bonds and stocks:
-Different:
First, the characteristics: The stock is a certificate or book entry record of ownership of a part
of the charter capital. At the same time, the bond is a certificate or book entry of ownership of a
portion of the loan.
Second, the capacity of the owner: The owner of the share is called the shareholder of the
shareholding company, has the right to participate in managing and operating the production and
business activities of the company. The buyer of the bond becomes the creditor of the company,
has the right to demand payment of the debt as committed, but no right to the management of the
company.
Third, the rights of the owner: The shareowner of the shareholding company is divided into
profits (also known as dividends); however, this profit is not stable but depends on the business
results of company. Meanwhile, the owner of the bonds released by the joint stock company are
paid periodically, interest rates are stable, regardless of the company's business results.
Fourth, market prices: market share price will be constantly changing, subject to the impact of
many factors. Meanwhile, bond market prices are relatively stable due to the stability of debt and
interest rates.
Fifth, the maturity date: The shares do not have maturity date, and the bonds usually have a
certain period of maturity time written in the bonds.
Sixth, the legal consequences of issuing to the company: The result of the issuance of shares
will increase the charter capital of the joint stock company and change the management of the
shareholders. The results of the bond issue will increase the share capital of the joint stock
company and will not affect the right of governance of the shareholders.