What is the difference between a stock and a bond?

A stock represents ownership in a company, giving shareholders a claim on its assets and profits. When you buy stocks, you become a partial owner and can earn returns through price appreciation or dividends. A bond, on the other hand, is a loan made to a corporation or government entity. Bondholders receive fixed interest payments over time and are repaid the principal at maturity. Stocks carry higher risk, as their value can fluctuate widely, while bonds are generally considered safer, offering predictable income but with lower returns compared to stocks.