What distinguishes stocks from bonds?

Stocks are distinct from bonds primarily because they represent ownership in a company. When an individual purchases stocks, they are buying shares which give them a claim on a portion of the company's assets and earnings. This ownership can come with voting rights in company decisions and the potential to profit from the company's growth through appreciation in stock value and dividends.

In contrast, bonds are debt instruments. When you buy a bond, you are essentially lending money to the issuer (which could be a corporation or government) in exchange for periodic interest payments and the return of the bond's face value when it matures. This fundamental difference in the relationship between the investor and the company is what sets stocks apart from bonds.

The other choices present misunderstandings of the nature of stocks and bonds. Stocks cannot be classified as loans, nor do they guarantee returns. Bonds, being a form of debt, are not considered equity ownership either. Thus, the essence of stocks as a representation of ownership in a company is what makes this answer the most accurate.