Question

1. Explain the difference between debt and equity and explain how the bonds market operates.

Answer 1

Equity investments are related to buying a share in a Corporation with an aim of sharing returns in future whereas debt Investment are primarily loan component which relates to giving loans to Corporations with an aom for receiving principal and interest in return.z

Equity investments are the riskiest forms of capital whereas debt are less riskier.

Equity investments is done through buying stocks of a public company while debt is done through buying fixed income instruments.a

Bond markets operate in both primary and secondary environments. Secondary market is basically an open place where bonds are bought and sold as per the market forces of demand and supply.

Whereas primary market is the market of first issue where the company raises first time money through debt marketBond market operates in respect to variables like economic growth and inflation.

It operates OTC or on exchange

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