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Bond
What we use when a company needs to borrow money
Bond Indenture
Describes the specific promises made to bondholders. Held by a trustee (bank)
Types of Bonds
Debenture, Subordinated debentures, Mortgage, Callable (Redeemable), Serial (Redeemable), Convertible Bonds
Debenture Bonds
Secured only by the full faith and credit of the issuing corporation, no specific assets are pledged as security, investors have the same standing as the firm’s other general creditors
Subordinated Debentures
not entitled to receive any liquidation payments until the claims of other specified debt issues are satisfied
Mortgage Bond
Interest rate is typically lower as it is seen as not as risky