Why would a company use a form of long-term debt to capitalize operations versus issuing equity?

July 7, 2024 No Comments

A: A firm that needs money for long-term, general business operations can raise capital through either equity or long-term debt. Whether a firm uses debt or equity to raise capital depends on the relative costs of capital, the firm’s current debt-to-equity ratio and its projected

Why would a corporation issue convertible bonds?

July 7, 2024 No Comments

A: A convertible bond represents a hybrid security that has bond and equity features; this type of bond allows the conversion of its nominal value to either cash or a specified number of common shares of equal value. A corporation issues a convertible bond to

Yield vs Interest Rate

July 7, 2024 No Comments

A: The main difference between yields and interest rates is that each term refers to different financial instruments. Yield commonly refers to the dividend, interest or return the investor receives from a security like a stock or bond, and is usually reported as an annual

Where can I find year-to-date (YTD) returns for benchmarks?

July 7, 2024 No Comments

A: Benchmarks are securities or groups of securities against which investment performance is analyzed. Examples of popular equity benchmarks are the S&P 500 index, Dow Jones Industrial Average, Russell 2000 index, Nasdaq Composite, MSCI World Index, FTSE100 and Nikkei 225. Bond indexes are usually created

Why is debt issued in both temporary and permanent forms?

July 7, 2024 No Comments

A: Debt is separated into two categories: 1) Temporary or short-term 2) Permanent or long-term. Temporary or short-term debt refers to debt with a maturity of less than one year. This means that the debt is due to be paid in less than one year.

Where can I get bond market quotes?

July 7, 2024 No Comments

A: Getting bond quotes and general information about a bond issue is considerably more difficult than researching a stock or a mutual fund. A major reason for this is that there is not a lot of individual investor demand for the information; most bond information

Why is Manchester United (MANU) carrying so much debt?

July 7, 2024 No Comments

A: The takeover of Manchester United by the Glazer family beginning in 2005 saddled the historic club with substantial amounts of debt, which is a source of continuing controversy for many long-time supporters of the club. The Glazers paid around £790 million for the team.

Where Does Stock From Convertible Bonds Come From?

July 7, 2024 No Comments

A: Convertible bonds are considered a unique combination of debt and equity. They provide investors with the chance to convert a debt instrument into shares of the issuer’s common stock, at a set price and usually by a set date. This is usually done at the discretion

Why is my bond worth less than face value?

July 7, 2024 No Comments

There are two primary reasons a bond might be worth less than its listed face value. A savings bond, for example, is sold at a discount to its face value and steadily appreciates in price as the bond approaches its maturity date. Upon maturity, the

Which asset classes are the most risky?

July 7, 2024 No Comments

Equities is the riskiest class of assets. Dividends aside, they offer no guarantees, and investors’ money is subject to the successes and failures of private businesses in a fiercely competitive marketplace. After equities, real estate subjects its investors to the most risk. The meltdown of

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