Key Differences - equity vs bond

A stock is a financial instrument issued by a company depicting the right of

ownership in return for funds provided as equity. A bond is a financial instrument
issued for raising an additional amount of capital. These are issued by government
agencies and also by private organizations offering periodic interest payment and
principal re-payment at the completion of the duration.
Stocks are treated as equity instruments whereas bonds are debt instruments.
Stocks are issued by various companies whereas Bonds are issued by corporates,
government institutions, financial institutions, etc.
The returns on stocks are dividends that are not guaranteed and depend on the
performance of the company. Despite making substantial profits, if the board of
directors is of the opinion to deploy profits elsewhere instead of distributing a
dividend, such decisions cannot be questioned. On the other hand, bonds have fixed
returns that have to be paid irrespective of the performance of the borrower since
it is a debt amount. Thus, there is a guarantee of returning the amount in bonds.
Stockholders are considered as the owners of the companies and are given preference
in terms of voting rights on important matters. Bondholders are creditors to the
company and do not get voting rights.
The risk factor is high in stocks since the returns are not fixed or proportional
whereas bonds have fixed returns making it less risky. Bonds are also rated by
credit rating agencies which make it more structured before considering the
investment opportunity.
The stock market has a secondary market in place ensuring centralized trading as
opposed to bonds in which trading is done Over the Counter (OTC).
Stockholders may have to pay DDT (Dividend distribution tax) in case of the returns
received which can further curtail the returns received but bonds are not exposed
to such tax burdens.