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Why do coorporations issue bonds? 5 reasons
To borrow money to pay for major purchases, It is difficult or impossible to sel the stock, Finance ongoing business activities, To get money to operate or expand, The intrest paid to bondholders is a tax deductible business expense .
What is a coorporate bond?
Coorporation written pledge to. repay a speciifed amount of money with intrest
What is face value?
The face value is the dollar amoun tthe bond holder will recieve at the bonds maturity date.
What is maturity date
The date on which the coorporation is to repay the burrowed money
What is bond indenture
A legal document that details all the conditions related to a bond issue
When do coorporations pay inrest to bond holders?
Usually semi annually
Debenture bonds
Most coorporate bonds are debenture bonds and they are backed only by the reputation of the issuing company
Mortgage bond
A mortgage bond is a coorporate bond thta is secured by various assets of the issuing firm
Subordinated debenture bond
An unsecured bond thaty gives bondholers a claim secondary to that of other designated bondholders with respecet to intrest payments and assets
Convertibloe bonds
Can be exchanged at the owners option for a specified number of shares of a common stock
Domestic, Foreign, and Eurobonds
Issued in the country and currency of the issuer