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When taking out a corporate bond, there is risk involved as companies can default on their bond repayments. Investors are aware of this risk and so when the bond is drawn up (bond indenture) the contract normally includes a number of restrictive covenants that prevent the company from defaulting purposely or increasing its option to default on purpose.
Possible convenants may include:
the company having to maintain its working capital above a certain level i.e level of debt to assets.
cant sell its assets without approval
a promise to provide certain financial statements to the lenders
etc
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What are surety benefits?
If you are asking what are the benefits built into a surety bond then the answer is the surety bond guarantees a specific performance or amount up to the penalty amount of the bond. If you are asking what the benefits of surety are then surety provides the recipient of the surety bond a level of assurance that the person or business entity providing the bond is qualified to perform the required act. This is accomplished by the surety's investigation of the Principal and evidenced by their agreement to issue the surety bond that encumbers the surety to the amount of the bond's penalty.
What is a bearer bond?
A bearer bond is a negotiable loan instrument which is payable to its holder by the issuer according to preset conditions.
What is a notary bond?
Notaries in most states are required to post bond, ranging anywhere from $1,000 to $10,000. The bond is obtained through an insurance agent and lasts for the full term of office (4 years in most states).
If issued a bid bond can surety not issue a payment bond?
Yes. If the bid spread is significant, and or if the financial situation of the contractor changes beyond the comfort level of the surety between the bid and award, or if the final bond is contingent on receiving info.
What is an on demand payment bond?
This is a type of credit enhancement that guarantees payment of an obligation and must be paid by the enhancer on the demand of the note or bond holder.
The covenants and other terms of the agreement between the issuer of bonds and the lender are set forth in the?
bond indenture
Difference between bond agreement and bond indenture?
What is the difference between a bond agreement and a bond indenture?Bond Agreement: A contract for privately placed debt.Bond Indenture: A blanket agreement between a corporation and its bond holders that states the interest rate, maturity date, and other terms and conditions of the bond issue.Based on these two definitions a bond agreement is more of a private agreement between the company and the bond purchaser where the bond indenture is more of a legal agreement. Bond agreement could get complicated if it isn't a trusted person where the bond indenture appears as a contractual agreement to keep people honest.
Is a bond indenture is a bond with no specific collateral securing it?
Yes
What is a legal document that outlines all of the conditions of the bond?
A bond indenture.
What is a provision on a bond which provides for the systematic retirement of the bond prior to their maturity?
A provision on a bond that provides for the systematic retirement of the bond prior to maturity is known as a sinking fund provision. This provision requires the issuer to set aside funds on a regular basis to repay a portion of the bond issue before it matures, reducing the overall debt burden.
What is the legal contract setting forth the terms and provisions of a corporate bond called?
indenture
What is the contract to purchase bonds called?
The contract for a purchase of bonds is called a bond indenture, which provides a description of the bond issue as well as the rights of both the buyer and seller.
What are the two types of indent agents?
The two types of indent agents are indentures who act as middlemen to connect buyers and sellers in financial markets, and indenture trustees who are responsible for enforcing the terms of a bond indenture on behalf of bondholders.
What does debenture mean?
A debenture is an unsecured bond that's issued either by a governmental or civil corporation and backed only by the credit standing or integrity of the issuer, not collateral. It is documented by an indenture, which is an agreement.
What word is the same as contract?
Here are some synonyms(words that mean the same but are spelled differently: agreement bond indenture pact convention deal treaty catch yours truly,,, dfam23
What three words mean the same as covenant?
contract, agreement, undertaking, commitment, guarantee, warrant, pledge, promise, bond, indenture, pact, deal, settlement, arrangement, understanding. Pick three.
What impact does a companys bond rating have on its cost of capital?
short notes on : 1. cost of capital of a bond. 2. cost of capital of an equity share. 3. discounted pay backperiod. 4. modified internal rate of return. 5. mutual funds in india.
