BU111 Lecture Notes - Stock Valuation, Kijiji, Complementary Good
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BU111 Full Course Notes
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Document Summary
Represents debt for issuing corporation or government: for companies to borrow money, not like equity, keep control of company. Bond holders means them borrowing money to companies. Characteristics: legal, binding agreement, fixed rate of return (often paid semi-annually) What you get back investing in that bond, is certain. The return is certain: fixed term principal repaid at maturity. Principal: who ever owns the bond, collects the principal. Initial amount is the principal : priority over stockholders. If bond issued by corporation, bond holder are prioritize to who pays first. Since of legal obligation contract; legal, binding agreement. Unsecure: structure on the promise of the issuer. Since it"s unsecured it shouldn"t be called a bond, should be called debentures . Usually government bonds are unsecure *** (not sure: registered vs. Registered: until maturity, keep track of ownership of bonds, bond owner are registered on file, and will be paid back on maturity.
