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Wednesday, December 10, 2008

Corporate and Bearer Bonds

Don’t know much about what types of bonds are in the investment world?Two kinds of bonds are corporate bonds and bearer bonds. This information will give you more knowledge about the 2 types of bonds and how they are different from each other.
Corporate bonds are debt obligations issued by public and private corporations. Businesses issue corporate bonds to raise money for several purposes such as expanding the company, buying new equipment, or build a more lucrative plant. The company makes a promise to return the money on the maturity date which is the date the bond comes due. Until that time comes the bond pays a stated rate of interest, usually semiannually. The interest received from the corporate bond is taxable and must be declared. Unlike stocks, bonds do not give one an ownership interest in the issuing of the corporation.
What are bearer bonds? Bearer bonds do not have the owner’s name registered on the books of the issuer. Bearer bonds are different from stock because no records are kept of the owner or any transactions involving ownership. Bearer bonds contain detachable coupons. Each coupon represents the scheduled time the interest payment is due. Interest is claimed when one clips off the coupon and presents them to an agent of the issuing corporation or government agency for payment. Bearer bonds are negotiable by the holder, since it is not in registered form. Read More>>