More free lessons at: http://www.khanacademy.org/video?v=rs1md3e4aYU The difference between a bond and a stock.
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Find out how this method of debt investment is used to finance various levels of government and private companies. Be the first to check out our latest video…
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BONDS OBVIOUSLY GET PAID OFF FIRST.
I’m not actually doing Economics A-Level but I find it fascinating, so
thanks for putting these videos up.
much appreciated
Thanks, definitely subscribing
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Thank you! Love your videos!
@qwmagazinechannel khan pwned ur ass
Wow these videos are really great. I wish i had known about them when I
started studying finance. They are still great as a refresher though,
thanks!
Debt is also catagorized as part of a companies market capitalization.
great vid
sal u have ADD ? (sock .com )
can assets be mortgaged or do they have to be fully paid for, owned? and a
bond an asset to the holder but a liability to the seller, producer?
@khanacademy thats right u tell him
OMFG u are actually awesome.
OMG way better than my expensive MBA professor! thanks!
Does it always add up so neatly, I’m amazed. So if a company performs debt
interest is paid, shares might go up . And if it doesn’t debt increases
(still paid) stock decreases. So if a company is a good business buy stock
, if its a bad business get a bond in it the rates are better and you still
get paid.
Thank you very much! I really appreciate your videos! They’re brilliant and
easy to understand. It makes it so much easier for me to revise what I
learn in school 😀
How to know which is the next video? Please!!
Often junk bonds are not rated. Why?
thank you . have clear pic now 🙂
I love these videos, it explains so much in less than 2 minutes, continue
please :)
Video was very helpful, thanks!
There has been a lot of talk about these recently, thought you might be
interested too…
@Pikapal1 You earn the coupon regularly, you are correct about that. The
reason you may resell a bond is just like why you might sell a stock,
because it’s value has peaked. Bonds fluctuate in price just like stocks
when new bonds are released. If they offer better bonds after you purchase
yours, your bond is worth less. But if they issue worse bonds, you might
want to sell yours now at a premium. Hopefully that makes sense.
I absolutely love you guys!
hahahah im typing a take home final on bonds and this video taught me
sooooo much
@Pikapal1 Not 100%. If you buy a CD that is offers 10% you will make $10 on
your $100 investment by the end of the year. If you purchase a 10% semi
annual coupon bond, you will receive $5 mid year and $5 at the end.
Receiving your interest earlier has a greater value associated with it.
It’s just like would you rather take $1,000,000 today or a year from today?
The difference is pretty immaterial, but still should be noted.
@Gunzlobo Well, it might help you understand this by flipping your
sentence: there is a higher interest rate whenever there is higher risk.
Think about that for a few seconds, and let me know whether you get it now
or not.
this is the smallest bond movie I’ve ever seen
Epic! Thanks for sharing!
What happens if the issuer is not able to repay the bond. Sat the company
that issued the bond goes bankrupt. Does this mean the bond holder ends up
with a useless certificate? Or is there still some value to it?
Risk is that the yields grow to high and the issuer won’t be able to afford
to repay its current debt or issue new debt
I agree with you in that earning a mid year interest of $5 is better and
smarter in terms of investment in the long term because getting it year by
year, even though it will amount the total of $10, will be worth less in
value compared to the $5 mid year return due to the rise in inflation.
Inflation plays a big part in investment and bonds which is why you should
always look for interest rates above the level of inflation