Question

Compare characteristics of corporate bonds and stocks. List three to five characteristics. No copy and paste, thank you.

Answer 1

Differences between characteristics of Corporate bonds and stock are as follows-

A. Corporate bonds are a type of debt financing whereas corporate stock is a type of equity financing.

B. Corporate Bond will be providing interest as fixed payments whereas corporate equity will not be having a fixed payment and dividend payment are not mandatory.

C. Corporate equity will be providing voting rights whereas corporate bonds will be providing right associated with creditor and no voting right.

D. Bonds will be having a preferential claim on the Assets of the company in case of liquidation whereas equity will be having residual claim.

E. Cost of bonds will generally be lower than the cost of equity because interest payments are tax deductible in nature.