Treasure Bonds

As you know most companies finance their activities through cash flows generated internally. If they need more money if they can increase the issuance of securities.

Security is an instrument that signifies an ownership interest in a company (in the form of a stock), a creditor relationship of a company or government agency (in case of bonds) or property rights such than those represented by an option, subscription right, and warrant.

The securities may be:

- Long term or short term

- Primary (such as stocks and bonds) and secondary (such as options and warrants).

Today, more and more companies prefer to issue their own bonds rather than borrowing from banks. Because it is often less expensive: the market may be a better judge of the solvency of the company to a bank, may lend money at lower interest rates. This is obviously not a good thing for banks, who must now lend money to borrowers who are much less secure than chip companies.

So what is a bond? In general, bonds are bonds that are issued by companies and government who are essentially promises to pay individuals or other investors, donors - and that 'they generally provide a fixed interest rate, which is a fixed repayment schedule and a date in the future during which the money will be returned. They are different, for example, stocks that have an uncertain future day off depending on the performance of a company, and no final maturity date of, longs while the Company remains active and solvent.

As I started to compare shares and bonds, it seems that I should mention the advantages and disadvantages of each. The advantage of debt financing (bonds) on private equity (share issue) is that bond interest is tax deductible. In other words, a corporation to deduct interest payments of its profits before paying ax t, while dividends paid on an already taxed profits. Apart from this "tax shield", it is generally considered a sign of good health and expected increase in future profits if a company borrows. On the other hand, increases the risk increasing financial debt: interest on bonds must be paid even one year without benefits, and the principal must be repaid when the debt matures, while the companies are not required to pay dividends or return of capital. Given all these facts most companies prefer to issue both bonds and stocks, so a debt ratio of sales tax savings against the risk of being declared bankrupt by creditors.

As for governments, they, of course, unlike companies, do not have the ability to issue shares. Therefore, they issue bonds when government spending exceeds revenues from income tax, VAT, and so on. long-term government bonds are known as safe securities, or simply gilts, Great Britain, and Treasury bills in the United States. British banks and U.S. Central also sell and buy short-term (three months) of treasury bills as a means of regulating the money supply. To reduce the supply of money, they sell these tickets to commercial banks and the withdrawal of funds received from the circulation, increase the money supply, they buy them, paying with money newly created is circulated in this way.

As I was saying about certain types of bonds government bonds, I think I should continue this. As regards the maturity bonds may be:

1. long-term (gilts or treasury bonds)
2. short term (such as Treasury bills)
3. medium term.

In the forms of.