Bonds and their dirtiness
Introduction So we are talking about bonds as a fixed income instrument which is a potential source of income from the debt category. What differentiates bond from equity is that bond does NOT entitle the bond holder with any kind of ownership in the company. That being said they are not eligible for dividends and they are also not eligible to vote in the annual general meetings. A positive outcome though is that in cases of bankruptcy, the bond holders are to be paid first , so the principal amount is certainly secured. On a high level , bonds are classified as government bonds and corporate bonds. A large number of governments issue bonds in order to raise capital for projects that span long years. To encourage people participation, governments sometimes waive off the tax on the income generated from bond sale and resulting accrued coupons. In a similar manner , corporates also issue bonds in order to raise capital and in case if they would not want to provide an ownership...
