FINANCE STRATEGY- EXAM REVISION QUESTION Essay Example | Topics and Well Written Essays - 1000 words

FINANCE STRATEGY- EXAM REVISION QUESTION - Essay ExampleThis means that the repayment of the superstar exceeds one year. The following are types of long-term debtBonds negotiable instruments that can be bought and sold like common neckcloth, usually at units of $1,000 which is called its face or compare value. It has a specified interest rate called coupon rate. Interest payments are usually paid at the end of each interest period, while the headway is paid at maturity.Debentures This is a bond the only collateral of which is the full faith and recognize of the company. The loan is made only on the basis of the creditworthiness and credit rating of the debtor. Debentures are and so a form of unsecured credit and command a higher interest rate because of the higher risk.Mortgage Bonds This is as well as a bond like the debenture, but it is secured by a specific collateral, usually a piece of real property. Mortgage bond lenders are thus secured lenders. Because of the securi ty, interest rates are usually lower than debentures.Convertible Bonds A type of debenture that may be converted to a share of stock at a later date. This special feature allows for a relatively lower interest rate, because of the lower risk of default (the lender may select to convert to common stock)i. Stock An instrument that signifies an ownership position (the stock holder owns a portion of the company). A stockholder is entitle to rights of ownership of a business, such as the right to receive a portion of the profits, and the right to vote for the companys board of directors, or for certain issues in the brass section of the company.i. Efficient market hypothesis Theory of Eugene Fama formulated in the sixties. It states that the prices of stocks in the stock markets have taken all relevant information into consideration already that is, prices discount all information so that it is impossible to beat the market by trying to buy stocks at undervalued levels. Stock