Bond vs Loan | Top Differences You Must Know! - YouTube

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that's given below. Let's study today a topic that is more on the accounting

part which is liabilities in accounting that is bonds and loans they both

are liabilities in any financial statement let's try and study this topic

and the differences now the primary difference between the bonds and loan is

that the bonds they are the debt instrument okay and that is

issued by the company for raising the funds which are highly tradeable in the

market that is a person holding the bond can sell it in the market without

waiting for its maturity where is if you talk about loans a person you know

you can say that first of all bond can sell it market without waiting for

maturity. Here loan is an agreement between two parties where one person borrows the

money from another which are not generally you know traded in the market

so the terms of the bonds are related to each other however they are not same and

have certain core differences both are debts they both of them are debts okay

however they are not same and they have certain core differences now a bond is a

kind of or you can say a loan that will be used by large entities or the

corporations or the government to raise capital which they require for operating

the business and it is done by selling IOU used to the public so what is

loan?A loan is basically a debt which a lender will lend the money and

borrower will borrow the money. So a specific time limit will be set for the

repayment of the debt money which includes both interest amount and

principal amount which has been borrowed by the borrower from that of the

lender so the principal amount is mostly paid in

installments regularly when every installment is similar amount of the

money it would be called an annuity now what is bond? A bond is commonly referred

to as the fixed income securities and is one of the three major asset classes

that individual investors are usually most familiar with along with the stocks

equities and the cash equivalent. In many governments, the corporate bonds are

publicly traded others are traded over-the-counter or privately between

the lenders and the borrower's. Let's understand this with the help of the

infographics first of all the basic difference let's try and understand a

Bond is a kind of a debt instrument it is the way for the government of the

company to raise money by selling in its effect I used with the interest payment

annually. A loan is another kind of a debt okay which is provided by banks mostly

private with a variable rate interest rates. Government bond yields are likely

to be low and they are safest because it is backed by the government

taxes. Loan is comparatively to the bond the loan interest rates is mostly

high and the cases are higher in case unsecured loan its interest rate would

be much more higher the source in the place when we talk about bonds can

be sold in the bond markets to the financial and the public institutions

while that of the loan are sanctioned by the banks mostly the ownership bonds in

the loans bonds are usually sold by the government's or the firms while loans

are borrowed by the corporates or the individuals type of the interest rates

interest rates in the bonds could be fixed variable or could be non zero

coupons zero coupon bonds it is called as which are issued at a discount to the

par we are talking about zero coupon bonds and the difference is taken as

interest in a book that pro rata base here it isn't fixed on variable there is

no zero coupon bonds.Trading bonds that are sold and purchases

in the bond markets and the bond prices can move up and down like a stock prices

and it can be traded there a bond traders were trading day in and day out

Loans are generally fix with a bank that has land and there is no such trading

that goes on. The tenure US Treasury bonds and mortgage-backed security the

asset back security are the type of the bonds and talk about the loans the term

loans, variable bank loans, and the crash credits comes into picture well after

this let me make you understand the key differences between the bonds and the

loans now the main difference is that bond is this is a highly tradable okay

so if you purchase a bond there is usually a marketplace where you can

trade in this means you can even sell the bond rather than waiting for the end

of the thirtieth period in practical people purchase bond when they wish to

increase the portfolio in that way and you can say the loan tend to be they

they do tend to be agreement between the borrowers in the banks and loans are

generally non-tradable and the banks would be obliged to see out the entire

term of the loan now in case of the repayments busy the bonds tend to only

be repaid in full at maturity date example around ten or twenty or thirty

eighth year now if you're the banks it perhaps expects the repayment of both

the principal interest during the repayment period at you can say regular

intervals. Interest rates on the government bonds are generally lower and

the US and the UK Commons bonds are perhaps treated as the low-risk private

loans or a non unsecured debt on the other hand are likely to attract a

higher rate of interest the copper bonds are mostly somewhere between depending

upon the reputation of the corporate assuring the bond give the corporates

say significant greater freedom to operate as it deems fit because it frees

from the restrictions that are often attached to the loans that are lend by

the banks consider for example the lenders or the creditor's often require

corporates to agree the variety of the limitations of the covenants such as not

to issue debt more but to make corporates acquisitions until the loans

are repaid this is more than the loans part but the

rate of interest that the companies paid the bond investors often less than the

rate of interest that would be required to pay that of the loan from the banks

but the bonds that are traded in the market do possess the credit rating

which are issued by the credit rating agency which starts from the investment

great respect later great which investment grades are considered as to

be low risk okay and you can say that you know the investment grade bonds are

low risk and usually they have low yields where as suspectuality bond are

considered of a higher risk okay and that in that particular regards do to do

that high risk and hence they are traded at the high yield compensate the

investors for the risk for the payment so on the contrary loan doesn't have any

such consequence at great worthiness is checked by the investors well so finally

let me conclude on this loans are kind of a debt which a lender will lend money

and a borrower will borrow the money and specific time is set to repayment of

the debt pay debt money which includes interest and the principal amount which

has been borrowed by the corporate or an individual borrow from the lender and a

bond on the other hand is a type of loan which is also known as a debt security

and in the case of the bonds the public is the creditor or the lender and the

big corporates of the governments are usually the borrower's so I hope you

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