BU227 Lecture : Chapter 11
Document Summary
Chapter 11: characteristics of long-term notes and bonds payable. Private placement: raising long-term debt directly from financial service organizations (banks, insurance companies, and pension fund companies. ) Often called a note payable: written promise to pay a stated sum of money at one or more specified future dates maturity date(s). In many cases, a company"s need for debt capital exceeds the financial capability of any single creditor. Then, the company may issue publicly traded debt called bonds: can be traded in established markets that provide bondholders with liquidity. Loans and notes are often for terms of five years or less, while mortgage terms can exceed 25 years. Lenders often protect their interests by requesting that the debt be secured. In the case of a personal credit card, the debt is unsecured, which means that if a debtor fails to make the required payment, or defaults, the lender cannot repossess any specific asset of the cardholder.
