Trading Places

The bond market is where investors go to trade (buy and sell) debt securities, prominently bonds, which may be issued by corporations or municipalities. The stock market is a place where investors go to trade (buy and sell) equity securities such as common stocks and derivatives (options, futures, etc). Stocks are traded on stock exchanges.

In the U.S., the prominent stock exchanges include Nasdaq, New York Stock Exchange (NYSE) and American Stock Exchange (AMEX), which was acquired by the NYSE Euronext and became the NYSE Amex Equities in 2009. These markets are regulated by the Securities and Exchange Commission (SEC).

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

Key Differences between the Bond and Stock Markets

The differences between the bond and stock markets lie in the manner in which the different products are sold and the risk involved in dealing with each market. One major difference is that the stock market has central places or exchanges where stocks are bought and sold, while the bond market does not have a central trading place; bonds are sold mainly over the counter (OTC).

The other key difference between the stock and bond market is the risk involved in investing in each. Investing in certain sectors of the bond market, such as U.S. Treasury securities, is said to be less risky than investing in stock markets, which are prone to greater volatility.

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