Loading the player...
A:

The bond market is where investors go to trade (buy and sell) debt securities, prominently bonds. The stock market is a place where investors go to trade (buy and sell) equity securities like common stocks and derivatives (options, futures etc). Stocks are traded on stock exchanges. In the United States, the prominent stock exchanges are: Nasdaq, Dow, S&P 500 and AMEX. These markets are regulated by the Securities Exchange Commission (SEC).

The differences in the bond and stock market lie in the manner in which the different products are sold and the risk involved in dealing with both markets. One major difference between both markets is that the stock market has central places or exchanges (stock exchanges) where stocks are bought and sold. However, the bond market does not have a central trading place for bonds; rather bonds are sold mainly over-the-counter (OTC). The other difference between the stock and bond market is the risk involved in investing in both. Investing in bond market is usually less risky than investing in a stock market because the bond market is not as volatile as the stock market is.

Learn more about stocks and bonds in our Stock Basics and Bond Basics Tutorials.

This question was answered by Chizoba Morah

RELATED FAQS
  1. Why are most bonds traded on the secondary market "over the counter"?

    Like stocks, after issuance in the primary market, bonds are traded between investors in the secondary market. However, unlike ... Read Answer >>
  2. How does a bull market in stocks affect the bond market?

    Take a deeper look at the relationship between the bond market and equities, and see what might happen to bonds during the ... Read Answer >>
  3. What are the advantages and disadvantages of buying stocks instead of bonds?

    This is a common question among investors. Stocks and bonds differ dramatically in their structures, payouts, returns and ... Read Answer >>
  4. Is it possible to short sell a bond?

    Because bonds, like any other security, experience market fluctuations, it is possible to short sell a bond. Short selling ... Read Answer >>
  5. How can bond yield influence the stock market?

    Learn how bond yields influence the stock market. The relationship between bond yields and stocks changes depending on the ... Read Answer >>
Related Articles
  1. Investing

    What Is The Difference Between The Bond Market And The Stock Market?

    The differences between the two markets involve how each product is traded and the risks they present.
  2. Investing

    Corporate Bond Basics: Learn to Invest

    Understand the basics of corporate bonds to increase your chances of positive returns.
  3. Investing

    What Bonds Are Saying About The Next Stock Plunge

    The relationship between bonds and stocks can reveal a lot about the future direction of the stock market.
  4. Investing

    The Basics Of Bonds

    Bonds play an important part in your portfolio as you age; learning about them makes good financial sense.
  5. Investing

    Investing in Bonds: 5 Mistakes to Avoid in Today's Market

    Investors need to understand the five mistakes involving interest rate risk, credit risk, complex bonds, markups and inflation to avoid in the bond market.
  6. Investing

    How To Choose The Right Bond For You

    Bond investing is a stable and low-risk way to diversify a portfolio. However, knowing which types of bonds are right for you is not always easy.
  7. Investing

    The Best Bet for Retirement Income: Bonds or Bond Funds?

    Retirees seeking income from their investments typically look into bonds. Here's a look at the types of bonds, bond funds and their pros and cons.
  8. Investing

    U.S. Corporate Bonds: The Last Safe Place to Make Money

    There aren't many other sources right now for relatively safe, steady income.
  9. Investing

    The Advantages Of Bonds

    Bonds contribute an element of stability to almost any portfolio and offer a safe and conservative investment.
  10. Retirement

    Should I Invest in Bonds After I Retire?

    Yes, retirees should invest in bonds, but remember that not all bonds are safe investments. Seek the help of a financial advisor.
RELATED TERMS
  1. Bond Option

    An option contract in which the underlying asset is a bond. Other ...
  2. Bond

    A debt investment in which an investor loans money to an entity ...
  3. Bond Yield

    The amount of return an investor will realize on a bond. Several ...
  4. Discount Bond

    A bond that is issued for less than its par (or face) value, ...
  5. Corporate Bond

    A debt security issued by a corporation and sold to investors. ...
  6. Active Bond

    A bond or other fixed-income security that is frequently traded ...
Hot Definitions
  1. Protectionism

    Government actions and policies that restrict or restrain international trade, often done with the intent of protecting local ...
  2. Fiduciary

    A fiduciary is a person who acts on behalf of another person, or persons to manage assets.
  3. Demonetization

    Demonetization is the act of stripping a currency unit of its status as legal tender and is necessary whenever there is a ...
  4. Investment

    An asset or item that is purchased with the hope that it will generate income or appreciate in the future. In an economic ...
  5. Redlining

    The unethical practice whereby financial institutions make it extremely difficult or impossible for residents of poor inner-city ...
  6. Nonfarm Payroll

    A statistic researched, recorded and reported by the U.S. Bureau of Labor Statistics intended to represent the total number ...
Trading Center