Bonds or preferred stock are two options available to corporate owners who desire to acquire additional funds through the issuance of new securities while still maintaining control over their business.
Bonds offer investors recurrent interest payments, but preferred stocks only pay fixed dividends. In response to changes in interest rates, the value of bonds and preferred stocks also varies. In the event that a business declares bankruptcy and is forced to close, bondholders are compensated before preferred shareholders.
A bond is a financial instrument that simulates a loan from one party to another. Preference shares are equity shares of an organization that receive dividend payments. Preference shares don't have a maturity date, while bonds sometimes do.
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