What are the advantages and disadvantages of bond stocks?

Stocks

Debanture have characteristics similar to both bonds and preferred events that in most cases provide it with general advantages over tribal events. Two of the main shares of primary similarities with preferred shares are planned, fixed payments or dividends made by shareholders and, in the case of liquidation, bond shareholders will be bonded before the sale of company assets. The main negative aspect is that it is not legally supported by the company of the company or collateral and is considered to be capital instead of the debt tool. This means that it is only ensured on the basis of the credibility and reputation of the company, and if the company is liquidated, the creditors are paid first, then the traditional bond holders, then the bond holders and the preferred shares. At this point, there may be no capital to pay bond shareholders, even if they receive priority before their larger group of joint shareholders.

Unsecured bonds are so similar to bond stocks in the United Statesthat conditions are often considered interchangeable. Both investments are a form of a voucher that recognizes the debt of the company without being entitled to the assets of the company if it fails. For this reason, bond shares are often issued by very large and stable corporations and national governments that can only bac into financial instruments on the basis of their reputation. In the case of the government, if a financial crisis arises, the nation can simply print more money to ensure bond holders or bond on liquidity and financial solvency. This allows the company to borrow money by issuing a bond shares without having to back up loans with the company's collateral.

One of the disadvantages of these types of investment in shares is that shareholders do not give any voting rights in the company, which is also Generally applies to preferred stocks. Despite this restriction, the shareholder can be transferred to convertible bonds to ordinary shares carried by voting rights. Restrictions of unsecured debt instruments like JE debature shares will increase the frustration of investors who do not pay off if there are problems with the liquidation of the company, but this is not to be attempted by an issuer. Instead, they are considered a form of long -term debt financing of the company's growth. The bond shareholder is a creditor of the issuer, such as the bank, and the dividends paid are the kind of interest on the shares itself, which acts as a form of unsecured loan of the company.

Bond definition is somewhat different from nation to nation. In the United States, it resembles unsecured bonds, while in the British bond is often secured and in Asian countries bonds are compared with mortgages. Usually there are also several bonds subcategories, including government bonds as a cash bond (T-Bond) or Treasury Bill (T-Bill) and removable bonds that are similar to bond convertibles, except that they can only be exchanged for ordinary shares in a subsidiary or associated companies.