MBA 101 Financial Management, What are Bonds?

Organization take on debt to finance their operation. When corporation borrows money to finance its operation it can choose to either take out a loan from financial institutions, such as a bank or insurance company or issue or sell bonds. When debt is incurred through a loan from financial institution, it is often referred to as private debt, because the debt is not publicly traded. In contrast, bonds are referred to as public debts because they can be traded in the public financial markets. The main difference between a bond and is stock is bonds have maturity dates and usually low risk compared to stock.

References: Principles of Management, 7e, Titman et.all
Investopedia.com
Personalfinance studies.com
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