Friday, April 17, 2009


Bonds first , you may issue bonds . These are nothing but special kinds of promissory notes, nicely printed on gilt paper , issued in $1000 or other denominations to be readily marketable for resale . A bond is a security promising to pay a certain number of dollars in interest every 6 months for a number of years until it matures . At that time the borrowing company promises to pay off the principle of the bond at its face value.
(Often the company has the right to call in the bond a few years before its maturity date by paying the bondholders some previously agreed-upon-price.)
Ordinarily , payments for interest and principle must be made on time , regardless of whether the company has been making earnings or not. Otherwise the company is in default of its obligations and can be taken to court like any debtor .

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