The Difference between Debt and Equity Markets

Definitions

The debt market is the market where debt instruments are traded. Debt instruments are assets that require a fixed payment to the holder, usually with interest. Examples of debt instruments include bonds (government or corporate) and mortgages.

The equity market (often referred to as the stock market) is the market for trading equity instruments. Stocks are securities that are a claim on the earnings and assets of a corporation. An example of an equity instrument would be common stock shares, such as those traded on the New York Stock Exchange.

Source: Federal Reserve Bank of San Francisco, https://www.frbsf.org/education/publications/doctor-econ/2005/october/debt-equity-market/
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