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    Why are bondholders similar to bankers?

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    Firms that issue bonds are "getting a loan" from bondholders. They borrow money from the first bondholders and are required to pay interest and repay the principal at maturity to the owner of the bonds on the various payment dates. While bondholders may change hands, the firm that issued the bonds is ...

    Solution Summary

    I have discussed the similarities and differences between traditional bank loans and bonds and given you an excel sheet with the two types of loan contrasted (made up some numbers to show you a visual).