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Difference between Debt and Equity and Features of Debt and Equity.


We can differentiate Debt and Equity with the help of their definition. Both of these can be defined by following ways.

Debt=

Debt can be defined as a written agreement which contains due date, interest rate on debt and a promise to pay a debt to the debt issuer.

Equity=

Equity can be defined as the ownership or interest of shareholders in a company, when a company issues additional share it helps the company generating more finance.

Features=

Features of Debts and Equity are following:

Features of Debts=

  • Debts are less risky than equities. 
  • It provides Lower returns. 
  • It provides returns consistently. 
  • The prices of debts do not changes over night. 

Features of Equity=

  • Equities are more risky than debts. 
  • Prices of shares can fluctuate in every second. 
  • Returns may be higher or lower depends upon the market situation. 
  • There is no consistency in returns because of fluctuation. 
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