Comparison/contrast paragraph by Yuliya Kabanenko

Yuliya Kabanenko

Group #13

Comparison/contrast paragraph
(point-by-point)

The main instruments of the financial market are shares and bonds, which have many differences in comparison to each other. First of all, a bondholder has a status of creditor, but does not have a right of property, while a shareholder is one of the owners of an enterprise. The payment of interest on bonds does not depend on the financial position of enterprise and its profits. In contrast, payment of interest on shares is made according to both financial position and profits of enterprise. Bondholders have a priority right on the assets of enterprise after its liquidation, whereas shareholders can use this right only after bondholders. Interest on bonds is paid in accordance with the terms, determined by the conditions of the loan, whereas shares yield interest during unlimited period of time. The amount of dividends of bondholders is determined, unlike the amount of dividends of shareholders is not determined. Although the shareholders have a right to take part in enterprise management, the bondholders does not have that right. So, bonds and shares are the most used securities on the financial market, and both of them have their own advantages and disadvantages.