The correct answer is B. Stocks allow investors to own a portion of the company; bonds are loans to the company.


The primary difference between stocks and bonds is the relationship between the investor and the company following a purchase.

Stock represents shares in a company, which means that a person who bought the stock of a particular business becomes its shareholder.

A bond, on the other hand, is when a person loans money to an organization and then receives it back with interest.

Interest rates vary depending on the nature of the company and the size of the loan.

Stock or Bond infographic.
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Many people wonder which option is best for investment – stock or bonds?

However, there is no definite answer. Bonds are safer because there is a high chance of earning money back with interest. Buying stock is much riskier because the return on investment depends on the company’s profitability, but it can generate higher returns in case of success.