Question

What are bonds, stocks and project? What makes them similar and what makes them different?

Answer 1

Point of difference	Bond	Stock
Meaning	Bond is a security that promises that payer a fixed interest and principal payback after some time	Stock is the a security that raised capital for the firm and is carrying ownership interest
return	Interest	Dividends
Holders right	Holder has no right on the company	The holder has ownership rights to the company
Payment guarantee	Holder has the guarantee of principal and interest payment	The holder doesn’t have any payback guarantee.
Decision making	The holder is not involved in management and decision making of the company	The holder has the right to make decisions in the company
Voting rights	The holder doesn’t have any voting rights	The holder has the voting rights
Risk	Low risky method and so comparatively low return	High risk and so higher return

Now Project Bonds:

• Project bonds are the type of bonds raised to raise funds for a particular project.
• They are not for long period of time, only till the life of the project
• The holders doesn’t have any right on the company or their decisions
• There is a fixed interest and principal repayment here
• It’s a risky method and thus has higher rate of interest than normal bonds.

Similarity:

The only similarity they have: All these are the kind of security that are used to raise funds.