Bondholders tend to offset the effects of selfish strategies implemented by shareholders by increasing the interest rate on monies loaned to the firm.
Shareholders are those who own stock in a company, whereas bondholders are those who own bonds issued by a company. Both investments offer the opportunity to make money, but there are risks inherent in each as well. When you purchase a company's stock, you're essentially buying a piece, or share, of that company.
Technically, a bond issuer is a borrower, and the bondholder is the lender of the money. Till the maturity of the bond, the bond issuer pays periodic (can be annual/ semi-annual) interest to the bondholders, and upon maturity, the issuer returns the principal amount borrowed to the holder of the bond.
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