- Equity Security (Stock/Shares):
- Represents ownership in a company.
- Holders receive profit/dividend and capital gains.
- Entitle holder to some control (voting rights).
- Example: Shares of “XYZ Pvt. Ltd.” purchased by an owner.
- Debt Security:
- Represents borrowed money that must be repaid.
- Defines amount borrowed, interest rate, and maturity date.
- Holders receive interest and principal repayment.
- Example: Bonds issued by “XYZ Pvt. Ltd.” to individuals.
| Feature | Equity Security | Debt Security |
|---|---|---|
| Nature | Ownership in a company | Borrowed money (loan) |
| Return | Profit/Dividend, Capital Gains | Interest, Principal Repayment |
| Control | Entitles holder to some control (voting rights) | No control over the company |
| Example | Shares/Stocks | Bonds, Debentures |