SHARE AND BONDS DIFFERENCES
Even though for a small number of people, stocks and bonds are already familiar, we will present this knowledge to beginners, students / university students may be used as a cheat sheet during exams or as steps as investors. Some of the key differences are:
A. SHARE:
1. Proof of company ownership
2. Unlimited timeframe
3. Shareholders earn income called dividends with uncertain frequency
4. Dividends are paid from company profits, the potential profit of the company is difficult to estimate
5. In terms of taxation, dividends are part of the company's profits after being taxed
6. Stock prices are very volatile and very sensitive to macro and micro conditions
7. Shareholders have voting rights in the company (GMS)
8. If there is liquidation (company dissolution), the shareholders have inferior claims (they will receive the remaining results of the dissolution)
B. BOND
1. Is evidence of debt recognition
2. Limited time period, the due date is determined
3. The interest rate and payment period have been determined
4. Both companies for interest and loss of interest and loan principal must be paid
5. Bond interest is first issued as a pre-tax expense
6. Bond prices are relatively stable but sensitive to interest rates and inflation
7. Bondholders do not have voting rights in the company
8. In the event of liquidation (company dissolution), the bondholders have a claim in advance against the company's assets
Currently, shares are transacted by Securities Companies through the stock exchange and have reached a high daily transaction value so that the formation of share prices is relatively reasonable and regular because the transaction mechanism is in the form of an auction. Meanwhile, most of the bonds are transacted through OTC so that the formation of the price is not yet transparent. However, you don't need to be discouraged about the bond market because after all, bond prices are only sensitive to interest rates and inflation, both of which are easy to figure out. So you don't have to worry about bond prices even though they are not as transparent as stocks
477.225 SRY