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What is the difference between a stock and a bond?
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The primary difference between a stock and a bond is that stocks represent a portion of ownership in a company, while a bond is a loan that an investor makes to a company or governmental entity. Stocks usually pay out dividends based on the company's profits, whereas investors are paid a fixed interest rate on a bond. In addition, stocks can appreciate substantially in value, whereas bonds typically have a fixed maturity date and by that date, the bond issuer is obligated to repay the loan amount to the bondholder.