Essays on The Corporate Debt Market Assignment

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The paper 'The Corporate Debt Market' is a wonderful example of a marketing assignment. The equity market, which is also known as the stock market, is one that is used for trading of equity instruments. One example of the equity instrument is the stock shares such as those traded in stock exchange markets in different parts of the world. Stocks are securities based on the claims of earnings or assets of a given corporation. The following paper intends to discuss various options of debt and equity options available for companies in funding their operations. Equity MarketFinancing a business or countries’ budgets through equity is instrumental in ensuring that funds are acquired without incurring debt.

It is critical to note that purchasing equity instruments helps those who buy stock gain direct ownership of the business, based on some shares they have bought. Therefore, individuals, governments, or groups that buy equity instruments have the right to vote and make decisions on the issues regarding the business (Livermore & Smitten, 2013). In addition, shareholders have the right to claim the future earnings of the enterprise, which plays a critical part in solving financial challenges that either the country or individual owners may be facing during the financial or economic crisis.

To the average person, equity markets are known much more compared to the debt market. Equity markets are necessary for economic activity since they influence both consumer and investment spending decisions (Livermore & Smitten, 2013). The shares’ price is used to determine the number of funds that a company can raise in selling newly issued stock. In this connection, it determines the number of goods that can be purchased by a given company and, therefore, the volume of the company’ s production. Corporate Debt MarketThe debt market involves trading using instruments of debt.

Debt instruments refer to assets that need a fixed type of payment to the holder. There are several types of debt markets, one being the corporate debt market, which is also known as the corporate bond (Landry, 2010). The corporate debt market is a debt instrument that is issued by a corporation and then sold to investors. The backing to the bond issued is based on the payment ability of the firm, which is determined by its future operations.

However, in some instances, the company’ s assets are used as collateral for the bonds issued. Further, corporate bonds are considered to be of higher risk compared to government bonds. Based on this reality, the interest rates are always higher, including those issued for top-flight credit quality companies (Landry, 2010). The bonds issued are usually in blocks such as $1,000 in par value. Each block has a fixed or standard coupon of payment structure. In some instances, call provisions are included to allow for early repayment if there is any chance of the prevailing rates.

A firm can issue corporate bonds to get funds to finance its operations, which is instrumental in cautioning the financial position of a company. Selling corporate bonds also helps a company to gain trust and confidence from the public, which is useful in improving production and general performance.

References

Landry, D. (2010). The layman's guide to trading stocks. Los Angeles, Calif: Stilwell & Co. Pub.

Group.

Livermore, J. L., & Smitten, R. (2013). How to trade in stocks: His own words: the Jesse

Livermore secret trading formula for understanding timing, money management and

emotional control.

Markham, J. W., Gabilondo, J., Hazen, T. L., & Markham, J. W. (2011). Corporate finance:

Debt, equity, and derivative markets and their intermediaries. St. Paul, MN:

Thomson/West.

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