In finance, bonds are long-term debt instruments sold by a company or government to raise money. It is a long-term promissory note.
A Bond is an instrument which pays fixed amounts (usually) of interest (called a coupon) on a regular basis, over its life and is redeemed at par value (usually) at maturity, by the issuer .
Reasons for Issuing Bonds:
- To raise capital for their business for investments
- To Reduce the Cost of Capital
- To Effect Tax Saving
- Long-Term Financing
- Avoid long-term financing from banks
- Efficiency of management
- Lower interest payments
- No Dilution of Stockholder's Equity
- Call options by the company
- Convertibility options by the company
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