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Question

How do Bonds compare with Stocks & Shares?

Answer

The major difference between Bonds and Stocks & Shares is that shareholders have a stake in the company, whereas bond holders are lenders to the issuer.  Another difference is that bonds usually have a defined term, or maturity, after which the bond is redeemed, whereas stocks may be outstanding indefinitely.

Bond prices go up and down like share prices but not as much.  The issue price is linked to long-term interest rates, but once issued, their value will go down when rates are rising, and up when interest rates are falling.

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