The Market for Borrowing Corporate Bonds Essay Example | Topics and Well Written Essays - 2000 words

The Market for Borrowing Corporate Bonds - Essay Example An efficient corporate bond market will lead to the efficient allocation of investment funds. An efficient market will also lead to investments in riskier assets. The types of securities which can be issued in the corporate bond market are debentures, unsecured notes and subordinated debt. One of the major reasons for developing a corporate bond markets is that the bond market provide an alternative solution or source for operational funds for the private sector other than borrowing from the equity markets and banks. This helps in improving the financial stability and allocation of credit. Companies running successfully can decide to expand their activities and commence new projects. To raise capital the company can decide on raising the funds from the corporate bond market as it can be beneficial for the company in the long run. The following sections give a detail understanding of corporate bonds. These sections describe the types of securities that can be issued in the corporate bond market, the types of companies that can issue it, the benefits of issuing bonds over other sources of finance, the providers of debt and their requirements. This information will certainly help the Board of Directors to reach a decision regarding the use of corporate bonds for raising capital to finance the new project. Types of securities that can be issued in the corporate bond market A company can issue three types of securities in the corporate bond market. These three types are explained below. 1. Debentures A debenture is secured by a fixed or floating charge over the issuing company’s unpledged assets. There are two types of debentures: fixed charge and floating charge. Both the types are explained below. a. Fixed Charge debenture: A fixed charge is placed over the permanent assets of the company such as fixed as sets. These assets cannot be sold until the bondholder has been repaid in the event of default. These bondholders have the first claim on the assets of the company. b. Floating charge debenture: A floating charge is issued over those assets which the company will sell in the normal course of the business to generate income such as finished good. These assets can be sold so the company issues a floating charge over these assets. Once the company defaults the floating charge becomes fixed charge. The bondholders will then take possession of the assets. Once the claims of the fixed charge bondholders have been satisfied, these bondholders can claim on the remaining assets. For example, if all the fixed assets have been used to pay off the fixed charge debenture holders, then the assets that the company sells to generate income will be used to pay off the floating charge debenture holders. 2. Unsecured Notes It is a corporate bond with no form of underlying security attached. These bond holders have no claim over the assets until the claims of the fixed-and floating charge bondholders have been satisfied. For example if a company defaults, the fixed charge debenture holders will be paid first, then the floating charge will be paid and finally the unsecured notes holders will be paid. 3. Subordinated Debt Subordinated debt is a long-term debt issue that ranks behind all other creditors. The subordinated debt also pays a specific interest stream. In the event of a default, the holders of subordinated debt receive nothing until the claims of all other creditors are satisfied. The debt issue may also include an agreement which states that the debt will not be presented for

Teen Stress Essay Example | Topics and Well Written Essays - 1000 words

Teen Stress - Essay Example Learning the stress management techniques helps teenagers to handle stress and minimize the negative effect of the difficult or painful experiences. Teenage stress must not be ignored by adults, especially parents, because if left untreated, it can result in the serious problems such as mental disorder and de-socialization. The events that cause stress are called stressors and the stressful event can be anything starting with the fear, peer pressure, passing the exam, divorce of the parents and death of the relative or the friend. Teens have the psychological predisposition to perceive the situations more dangerous than they are in reality (Sluke 11). Most of the situations causing teen stress are not problems in the eyes of the adults. For example, the failure to become the cheer leader in the school team can be a huge stress for the teenager, while the adults would not consider it to be the failure at all. This is one of the causes why teen stress is often not treated seriously by the adults and teens have to cope with their inner pain on their own even if they have no resources to cope with it. Some sources of the teen stress include but not limited to the school frustration, negative self-perception, body changes, misunderstandings with friends, separation of the parents, changing schools, setting too high expectations, and financial problems in the family If teenagers become overloaded with stress and do not receive the outside help or support, they are at risk of developing anxiety, social withdrawal and even physical illness. Stress impacts the teen’s health – faster heart rate, increased muscle pressure and upset stomach (Sluke 39). The similar changes occur when the teen feels relieved from stress. Teen who learn to relax emotionally using stress coping techniques are less helpful and are able to respond to stressful situations. When the teen