Stocks, also known as equities, are securities that represent ownership in a publicly traded company. When you buy a stock, you are buying a small piece of the company and becoming a shareholder. As a shareholder, you have the right to vote on company decisions and are entitled to a portion of the company's profits, known as dividends.There are two main types of stocks: common stocks and preferred stocks. Common stocks are the most widely traded type of stock and give shareholders voting rights and the potential to earn dividends and capital appreciation. Preferred stocks, on the other hand, do not typically have voting rights but often have a higher dividend yield and priority over common shareholders in terms of receiving company assets in the event of a liquidation.Bonds, on the other hand, are a type of debt security. When you buy a bond, you are lending money to the issuer, such as a corporation or government. In return, the issuer promises to pay you a fixed rate of interest and return the principal amount of the bond when it matures. Bonds are considered to be less risky than stocks, but they also offer lower returns.In summary, stocks represent ownership in a company and offer the potential for capital appreciation and dividends. Bonds, on the other hand, represent debt and offer a fixed rate of return. Stocks tend to have a higher potential for growth but also a higher level of risk, while bonds are generally considered to be less risky but also offer lower returns.
