Question

Compare and contrast the bond and equities markets. (hint: risk in each)

Answer 1

Differences between Bond and equity markets are as follows-

A. Bonds markets are generally over-the-counter exchange market where is equity markets are generally exchange based markets.

B. There is the highest amount of liquidity in the equity markets whereas Bond markets are not that liquid as equity markets.

C. Equity markets are often characterized by more risk whereas Bond markets are not that risky.

D. There is a higher volatility associated with equity Markets and there is a lower volatility associated with the bond markets.

E. There are derivative segments in the equity markets where as there are no derivative segment in the bond markets

F. There is a larger number of market participants in the equity markets than Bond Markets and equity markets are generating higher volume.