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Amwelladmin (talk | contribs) (Created page with "A bond is a debt security, traditionally bearing a fixed rate of interest. Compare with a note — which traditionally bears interest at a floating rate, a...") |
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A [[bond]] is a [[debt security]], traditionally bearing a [[fixed rate]] of interest. Compare with a [[note]] — which traditionally bears interest at a [[floating rate]], and a [[medium term note]], which can be fixed, floating or structured with all kinds of exotic [[derivative]] payoffs. Contrast those [[debt securities]] to [[equity securities]] — instruments such as shares, warrants units, which pay neither principal nor interest, but rather account for the overall performance of the company who issue them. | A [[bond]] is a [[debt security]], traditionally bearing a [[fixed rate]] of interest. Compare with a [[note]] — which traditionally bears interest at a [[floating rate]], and a [[medium term note]], which can be fixed, floating or structured with all kinds of exotic [[derivative]] payoffs, but is issued from a [[medium term note programme]], rather than as a stand-alone issue. | ||
Contrast all those [[debt securities]] to [[equity securities]] — instruments such as shares, warrants units, which pay neither principal nor interest, but rather account for the overall performance of the company who issue them. | |||
[[Debt security|Debt securities]] generally rank ahead of equity securities in the capital structure of the issuer. This is because an issuer must pays off [[creditor|creditors]] before [[shareholder|shareholders]]. | |||