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Sub: Finance                                                                            Topic: Debt Instruments
Capital market debt instruments:

The capital market supply long term funds to corporations, government entities and other users of
capital. The general type of debt instrument of the capital market is the bond. Bonds usually pay
interest to the holder once in every six months (semi annually) and pay the principal or face amount
upon maturity.

Treasury notes and treasury bonds: The long term bond issues of the treasury that are available to
investors are the treasury notes and the treasury bonds. Treasury notes have original fixed maturities
of not less than one and not more than ten years from the date of issue.



Public sector undertaking bonds:

PSU bonds are issued to finance projects of various public sector undertakings.

Corporate bonds:

Debt securities of corporations with maturity of longer than one year are corporate bonds. The usual
par value of a corporate bond is decided at the time of issue and the maturity period ranges from
about two to as many as thirty years. During recent times, however, corporate bond issues have been
of shorter maturities as inflation and economic uncertainties have caused investors to be less willing
to commit their funds for longer periods of time.

Equity investments:

Equity securities represent the residual ownership of the firm. Residual ownership means that the
debt holders must first be paid off, before the company belongs completely to the equity holders. The
two types of equity securities are common stock and preferred stock.


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Sub: Finance                                                                            Topic: Debt Instruments
Common stock: The common stockholders are the risk takers and they own a portion of the firm that
is not guaranteed and they are last in line with claims on the company's assets in the event of a
bankruptcy. In return for taking this risk, they share in the growth of the firm because the growth in
the value of the company accrues to the common shareholders. The company may make a periodic
cash payment called a cash dividend to the common stockholders. The common shareholder has no
guarantee of receiving a dividend payment. Common stockholders usually have voting rights that
allow them to vote on the corporation's board of directors. Since the board of directors hires the top
management of the company, the stockholders indirectly determine the company's management.
In order to gain good grades and scores in examinations, the students should work hard and apart
from listening the lectures delivered by the teachers and professors at schools and colleges, the
students should devote definite time for doing home work and it should be in such a way that the
time allotted is meant for all subjects and in case of necessity the students can allot one hour per
subject or one subject per day and this depends upon the intensity of the subject. Apart from the
above the students can get help for finance homework from reputed websites nowadays.




                              www.classof1.com/homework-help/finance
 *The Homework solutions from Classof1 are intended to help students understand the approach to solving the problem and not for
                              submitting the same in lieu of their academic submissions for grades.
Sub: Finance                                                                             Topic: Debt Instruments




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Sub: Finance                                                                            Topic: Debt Instruments
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DOCUMENT INFO
Description: The capital market supply long term funds to corporations, government entities and other users of capital. The general type of debt instrument of the capital market is the bond. Bonds usually pay interest to the holder once in every six months (semi annually) and pay the principal or face amount upon maturity.