Stocks and bonds are both financial instruments that companies can use to raise capital. Unlike stocks, which come with ownership rights, bonds leverage a company's debt. This debt is reported in the financial statements of the business. Secured bonds are often backed by a company's assets, whereas unsecured bonds are not. Instead, they depend on the company's cash flows for repayment, making them a riskier investment. Bonds may be issued by a company or a local, state, or federal government. From an investor's point of view, high-grade investment bonds have less risk and volatility compared with stocks. Because of this, bonds can be favorable investments for risk-averse investors.

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