For many entrepreneurs debt securities are an excellent tool for raising funds necessary for the development of business.This method of borrowing finance is actively practiced in the modern world, as mutually beneficial to the parties to the transaction.
considering a financial instrument in general terms, one can imagine two main types: debt and equity securities.Securities of the first type, in fact, are the credit relationships.That is, the investor acquires a document giving him the right after a set period of time to request a refund the deposited amount with interest.An equity type of securities is a contribution to the charter capital of any company or organization.In this case, the investor can count on a steady income, which will vary depending on the amount of the profits and the number of shares.In a way, the investor becomes co-owner of the company.
the stock market of our country are mainly traded debt securities like bonds and notes.And may issue bonds, government agencies and independent legal entities.Of course, government securities are in high demand, as they are considered the most reliable.If we talk about the frequency, the bonds are long-term, that is in circulation for one year and more.
As a rule, upon expiration of the debt securities back to the issuer, which, in turn, pay the face value of the document, as well as the amount in excess of the quantities as interest payment on the loan.After the final settlement and credit relations between the issuer and the investor terminated as mutual obligations of the parties fully executed.In addition, it is possible to allocate debt securities with fixed and floating coupon rate, which represents the interest amount payable to the investor for the use of its capital.Fixed rate means that a short-term investor will receive the amount due in advance.And with floating coupon interest rate is set for a short period of time (for example, three months or six months), after which the newly converted.
debt securities are considered to be a fairly common way of borrowing resources, because eliminating the need to apply to credit institutions and to issue the loan.This is especially true for companies who already have a bank loan, and for young entrepreneurs.The investor is investing no less advantageous, because it is able to select the most favorable conditions for him, relying not only on the interest rate and term, but the level of liquidity, profitability and the degree of riskiness of what can be done when you open a deposit account.Moreover, many investors do not trust the modern banking system, considering it insufficiently reliable.In this case, they are investing available funds in government bonds, because this is the most highly liquid securities, as a guarantor of the state itself acts.
