While a commercial bond may default and become worthless, it can never be worth more than the face amount at maturity. The corporation has no other obligation other than to pay the interest and principal upon maturity. Bondholders generally have no say in the operation of the corporation unless the interest payment is in default. Bonds may be issued with specific assets of the corporation to back up the corporate debt, or as a general obligation of the firm. Treasury Bills, Treasury Bonds, Commercial Bonds, Cash, Savings Accounts and CDs are all debt instruments.
Stocks represent ownership or equity in a corporation.
Stocks may or may not pay a dividend. If a stock pays a dividend, it may change in amount from time to time and it is not guaranteed to continue. Like bonds, stocks may become worthless if a company fails. But unlike bonds, if the company prospers, there is no theoretical limit to the increase in value, and no redemption date. As owners of the corporation, stockholders are entitled to vote on the board of directors and may influence the operation of the company.