MGAB02H3 Lecture Notes - Lecture 5: Book Value, Premium Bond, Callable Bond
9 Aug 2016
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Document Summary
Companies can raise long-term debt directly from a number of financial service organizations, including banks, insurance companies, and pension fund companies: raising debt from one of these organizations is known as private placement. This type of debt is called a note payable, which is a written promise to pay a stated sum of money at one or more specified future dates, called the maturity date(s) In many cases, a company"s need for debt capital exceeds the financial capability of any single creditor: the company may issue publicly traded debt called bonds. Bonds can be traded in established markets that provide bondholders with liquidity. Loans and notes are often for terms of 5 years or less. All debentures and subordinate debentures have been issued in canadian dollars and bear a fixed rate of interest. A bond usually requires the payment of interest over its life, with repayment of principal on the maturity date.
