Equity shares are instruments issued by companies to raise capital and it represents the title to the ownership of a company. You become an owner of a company by subscribing to its equity capital or by buying its shares from its existing owner(s).As a shareholder; you bear the entrepreneurial risk of the business venture and are entitled to benefits of ownership like share in the distributed profit (dividend) etc. The returns earned in equity depend upon the profits made by the company, Company’s future growth etc.
Corporate bonds are debt instruments issued by a corporation(public and private companies), the holder of which receives interest from the corporation periodically for a fixed period of time and gets back the principal along with the interest due at the end of the maturity period.
Equity Shares v/s Corporate Bonds
|If you own Equity Shares||If you own Corporate Bonds|
|You are part owner of the company||You are a lender|
|You may enjoy voting rights.||You do not enjoy voting rights.|
|Payment of dividend to the investor||Payment of Interest by the company|
|Capital appreciation (increase in price of yourshare)||You may earn capital appreciation if your corporate bonds are listed.|
|It is the riskiest formof investment.||Corporate bonds are less risky than equity shares.|
|It is more liquid than corporate bonds||corporate bonds are not as liquid as shares|