Let s talk about the function of bonds in simple terms

Let me give you an analogy. As for me, I want to make money in a business, but I don't have enough capital, and you have money, but I don't want to make money by doing business. So, I asked you to borrow 100,000 yuan, promised to borrow for 3 months, and repaid you 110,000 when due, and the extra 10,000 is interest.

After negotiations, both of us agreed to the deal, and I made a note without evidence, so I gave you an IOU, signed my name and stamped the official seal, and this piece of paper is similar to a bond. If I don't pay back the money when it expires, you can take the note to the court to file a lawsuit, and the court will liquidate my assets, such as factories, means of production, etc., and sell them all in exchange for money for you.

**The holders, i.e., the shareholders, are ranked behind the bondholders in terms of the priority of repaying the debt, so the loss of the creditor is relatively small when the company goes bankrupt.

This is the simplest form of bond. There are many complex derivatives, such as convertible bonds, you need to read more information and study hard :)

It's very simple, that is, the company has no money, issues some bonds, others spend money to buy, and the company will not raise money, in return, the company will pay you a little interest every day, and then return the principal to you after maturity.

Bonds and ** are two different things.

It's hard to say on the lips alone, so it's best to find some books on how to get started.

A bond is a borrowing certificate issued by **, which needs to be repaid with interest at maturity. **It is a valuable certificate issued by an institution, the value changes with the market value, and it can be realized at any time without interest.

**Includes bonds. Including, bonds, derivatives, etc. ** refers to all kinds of legal documents that record and represent certain rights, which are used to prove that the holder has the right to obtain the corresponding rights by the content recorded in the certificate he holds.

According to their different natures, they can be divided into two categories: valuable and vouchers. Certificates** are priceless and include demand deposit certificates, IOUs, receipts, etc. Valuable ** is the index has a par amount**, and its essence is still a transaction contract or contract, including **, bonds, ** and so on.

A bond is a debt certificate that promises investors to pay a certain amount of interest and repay the principal at maturity in order to raise funds.

Bonds are issued by debtors such as enterprises and banks in accordance with legal procedures in order to raise funds and promise creditors to repay principal and interest on a specified date.

1.Introduction

Bond is a kind of financial contract, which is issued to investors when financial institutions, industrial and commercial enterprises, etc. directly borrow funds from the society, and at the same time promise to pay interest at a certain interest rate and repay the principal according to the agreed conditions.

The essence of a bond is a certificate of debt, which has the force of law. The bond purchaser or investor and the issuer are in a creditor-debtor relationship, the bond issuer is the debtor, and the investor (the buyer of the decon bond) is the creditor.

A bond is a valuable one**. Since the interest rate on a bond is usually determined in advance, a bond is a type of fixed interest rate (fixed rate). In countries and regions with developed financial markets, bonds can be listed and circulated.

2.Essentials

The par value of a bond refers to the par value of the bond, which is the principal amount that the issuer should repay to the bondholder after the maturity of the bond, and is also the basis for calculating the interest paid by the enterprise to the bondholder on time. The face value of the bond is not necessarily consistent with the actual issuance of the bond, the issuance ** is greater than the face value is called premium issuance, less than the face value is called discount issuance, and the equivalent issuance is called parity issuance.

The repayment period of a bond refers to the period of repayment of the principal of the bond as stated in the corporate bond, i.e. the time interval between the issuance date of the bond and the maturity date. The company should determine the repayment period of the corporate bonds based on its own capital turnover and various influencing factors of the external capital market.

The interest payment period of a bond refers to the time when the interest is paid after the bond is issued. It can be a lump sum payment due or a one-year, semi-annual or three-month payment. Taking into account the time value of money and inflation, the interest payment period has a significant impact on the actual returns of bond investors.

3.Key features:

Bonds, as a kind of creditor's rights and debts, like other valuable certificates, are also a kind of fictitious capital, not real capital, it is a certificate of real capital actually used in economic operation. Repayability means that the bond has a specified repayment period, and the debtor must pay the creditor interest and repay the principal on time.

Categories: Business Banking.

Problem description: What are corporate bonds? What are the types?

Analysis: A corporate bond is a debt covenant issued by a joint-stock company, in which the company promises to repay the principal and pay interest at a predetermined interest rate at a specific date in the future.

There are mainly the following types of corporate bonds:

1) According to whether the name is registered or not, it can be divided into: 1Registered corporate bonds, that is, the name of the holder is registered on the face of the bond, and the principal and interest must be received with the seal, and the corporate bond must be endorsed and registered with the bond issuing company when transferring.

2.Bearer corporate bonds, that is, Changqi does not need to indicate the name of the holder on the face of the bond, and the repayment of principal and interest and the transfer of circulation are only based on the bond and do not need to be registered.

2) According to whether the holder participates in the company's profit distribution, it can be divided into: 1Participation in corporate bonds refers to corporate bonds that can participate in the distribution of corporate profits to a certain extent in addition to interest income as agreed in advance.

2.Non-participating corporate bonds refer to corporate bonds in which the holder can only receive interest at a pre-agreed interest rate.

3) According to whether it can be redeemed in advance, it is divided into: 1Corporate bonds can be redeemed in advance, that is, the issuer can repurchase all or part of the bonds issued by the issuer before the maturity of the bonds. 2.Corporate bonds cannot be redeemed in advance, that is, corporate bonds that can only be repaid with principal and interest at maturity in turn.

4) According to the purpose of issuing bonds, it can be divided into: 1Ordinary corporate bonds, that is, corporate bonds characterized by a fixed interest rate and a fixed maturity.

This is the main form of corporate bond, which is intended to finance the company's expansion of production**. 2.The restructuring company is a bond issued to clear the company's debts, also known as a new bond.

3.Interest corporate bonds, also known as adjustment corporate bonds, refer to new bonds with lower interest rates issued by companies facing debt credit crises with the consent of creditors in exchange for higher interest rate bonds originally issued. 4.

Deferred corporate bonds refer to corporate bonds that can be extended after obtaining the consent of creditors when the company is unable to pay the issued bonds when they are unable to pay them and cannot issue new bonds to repay the old debts.

5) According to whether the issuer gives the holder the right to choose, it is divided into: 1Corporate bonds with options refer to the issuance of some corporate bonds in which the issuer gives the holder certain options, such as convertible corporate bonds (with an option to convert into ordinary shares), corporate bonds with warrants and refundable corporate bonds (with an option for the holder to sell back to the issuer before the bond matures).

2.Corporate bonds without options. That is, the bond issuer does not give the holder the above option.