The Stock Market

A stock market is a place where investors go to trade equity securities, such as common stocks, and derivatives—including options and futures. Stocks are traded on stock exchanges. Buying equity securities, or stocks, means you are buying a very small ownership stake in a company. While bondholders lend money with interest, equity holders purchase small stakes in companies on the belief that the company performs well and the value of the shares purchased will increase.
The primary function of the stock market is to bring buyers and sellers together into a fair, regulated, and controlled environment where they can execute their trades. This gives those involved the confidence that trading is done with transparency, and that pricing is fair and honest. This regulation not only helps investors, but also the corporations whose securities are being traded. The economy thrives when the stock market maintains its robustness and overall health.

The Bond Market

The bond market is where investors go to trade (buy and sell) debt securities, prominently bonds, which may be issued by corporations or governments. The bond market is also known as the debt or the credit market. Securities sold on the bond market are all various forms of debt. By buying a bond, credit, or debt security, you are lending money for a set period and charging interest—the same way a bank does to its debtors.
The bond market provides investors with a steady, albeit nominal, source of regular income. In some cases, such as Treasury bonds issued by the federal government, investors receive bi-annual interest payments.1 Many investors choose to hold bonds in their portfolios as a way to save for retirement, for their children's education, or other long-term needs.
Investors have a wide range of research and analysis tools to get more information on bonds. Investopedia is one source, breaking down the basics of the market and the different types of securities available. Other resources include Yahoo! Finance's Bond Center and Morningstar. They provide up-to-date data, news, analysis, and research. Investors can also get more specific details about bond offerings through their brokerage accounts.