Financial markets and institutions
...presenting partial ownership in a corporation. When one buys issued stock they are effectively an owner of a share of that company. They then share in the profits of the corporation, albeit the lack of, both of which are reflected by the value of the stock. Bonds are a promise from a corporation to pay the lender of money a fixed sum of interest regularly for a specific period of time. At the end of which the original loan is repaid. Bonds are issued as a way to generate liquidity for a corporation so that they expand with the hope of generating increased profits. The advantages of bonds include the main point, that they are a low risk form of investment. Because the interest rates are predetermined there is no uncertainty as to how much the investor can expect back. Another benefit is that they offe...