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Thus, a person who buys a bond expects, over a specific period of time, to recover the principal —
The amount of the loan — plus the interest — the fee the government pays the lender for the use of
The money. Corporations likewise have two means of raising money (apart from their own profits).
They may borrow it, and in doing so they may also issue certificates of debt. These certificates are
Called debentures, or, more commonly, bonds. Like government bonds, they pay interest to the
Buyers.
The second way for companies to raise money is to issue stocks, which represent ownership in a
Corporation. A company is literally selling part of itself to raise money. (The terminology varies
Between Great Britain and the United States. In Great Britain a company is said to issue shares,
While in the United States a company issues stock. In the United States stock is divided into shares —
100 shares of IBM stock, for example; in Great Britain “stock” has the same meaning as “bond”
Does in the United States. Here we use the American terminology.) Bonds and stocks are together
Called securities. The term stock market, though somewhat imprecise, is used to name the industry
In which stocks and bonds are bought and sold.
Just as governments must weigh the merits of higher taxes versus the merits of borrowing, so
Дата публикования: 2014-12-28; Прочитано: 239 | Нарушение авторского права страницы | Мы поможем в написании вашей работы!