Difference between Stock and Bonds?

These are main difference between a stock and a bond.

STOCKS:

Type of Financial Instrument: Equity

Order of claim: Dividends can be issued only after interest on all debts includes bonds is fully paid.

Legal obligations to holders: Dividends may be varies or omitted at the discretion of the board of directors, no principal or maturity dates are involved.

Rights of holders: Voting stockholders can influence management by electing members of the board of directors.

Tax status: Dividends are not tax-deductable.

DEBT

Type of Financial Instrument: Debt

Order of claim: Interest must be paid before any dividends on stock are issued.

Legal obligations to holders: Interest must be paid regularly to avoid insolvency; principal must be repaid at stated maturity date.

Rights of holders: Bond holders have no voice in management as long as they receive interest payments.

Tax status: Interest as an expense of doing business is tax-deductable.