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To raise money for some necessary purpose without selling off part of the company.
Example: The XYZ corporation, manufacturer of cow milking machine accessories, has a factory in New York State. Its products have become popular in California. They have found shipping this stuff across the country kills the profit margins, so they've decided to open a second factory in California.
XYZ could finance its new factory in three ways.
It could go to the bank and get a conventional business loan. Or, more precisely, it could TRY to get one; this factory is going to cost $500,000 and most banks don't want to write a loan that large.
It could sell some of the company to investors by issuing stock. This would turn XYZ over to the whims of Wall Street, and they might not want to do this.
Or it could create bonds. The people who buy them are loaning money to XYZ. The bond buyers will receive periodic interest payments (note: there are some really esoteric bonds that don't pay interest, but we won't talk about those now) and at the maturity of the bond will receive the price they paid for the bond.
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∙ 12y ago
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What companies have to issue bonds that are collateralized?
Companies with low credit standing often issue secured bonds, for which specified assets have been pledged as collateral.
Why does government issue only bonds while companies issue both stocks and bonds?
Because stock is ownership, and "the people" own the government.
What are companies with outstanding bond issue in the market?
Companies with outstanding bond issue in the market are companies that have used tax payers' moneys in the form of bonds but have not paid back the bond. Bonds are usually used for projects that benefit society as a whole, such as new schools.
Do corporations issue stocks and bonds?
They do in fact issue stocks and bonds.
Why do companies issue bonds instead of new stock?
frequently motivated to choose bonds over expansion of stock owners for two basic reasons: The cost of interest is deductible as a yearly expense, and there is no dilution of ownership through the extension of the company's liabilities.
What companies have to issue bonds that are collateralized?
Companies with low credit standing often issue secured bonds, for which specified assets have been pledged as collateral.
Why does government issue only bonds while companies issue both stocks and bonds?
Because stock is ownership, and "the people" own the government.
What are companies with outstanding bond issue in the market?
Companies with outstanding bond issue in the market are companies that have used tax payers' moneys in the form of bonds but have not paid back the bond. Bonds are usually used for projects that benefit society as a whole, such as new schools.
Do corporations issue stocks and bonds?
They do in fact issue stocks and bonds.
Can a private company issue bonds?
Yes, a private company can issue bonds to raise capital. These bonds are typically referred to as private placements and are offered to a select group of investors. Private companies may choose to issue bonds as a way to diversify their sources of funding and potentially lower borrowing costs.
Describe the differences that exist in current accounting for original proceeds of the issuance of convertible bonds and of debt instruments with separate warrants to purchase common stock?
Companies need to finance their business plans. In order to finance them, the company can either go for debt or issue shares or issue bonds to get the required investment. Debt can be in the form of bonds.
How can you become bonded if you have a criminal record in Missouri?
There is no way to answer this question. "Bonds" are issued by private insurance companies who make their own evaluation aad determination as to who they will issue one or not.
What type of bonds do the United states government give issue?
municipal bonds?
Do all corporations issue bonds?
No, not all do.
Why do companies issue bonds instead of new stock?
frequently motivated to choose bonds over expansion of stock owners for two basic reasons: The cost of interest is deductible as a yearly expense, and there is no dilution of ownership through the extension of the company's liabilities.
Can you become bonded if you have a criminal record in Maryland?
The answer to this question cannot be known. Bonds are issued by private insurance companies that issue the bonds. They are private businesses and can refuse bonding to anyone they don't consider 'fit' to be insured based on their own internal criteria.
Why issue convertible bonds?
Generally, convertible bonds come at a lower cost to the issuer.
