Question

3. Describe the concepts of common stock and corporate bonds. In addition, describe the forms in which securities may be issued. Finally describe the manor in which corporate securities may be marketed and how securities may be regulated.

Answer 1

1. Common stock is the concept in the corporate world that represents ownership in the company. Holders of the common stock in the companies elect the board of directors and vote on various corporate policies. Stakeholders act as an essential part of the companies. A corporate bond is a bond that the corporation issues to raise finance in the companies. It is a type of the debt-equity that a firm issues to the investors, and the stakeholders. The corporate bond is like a loan to the company, and the enterprise has to pay the loan back to the investors. The company can also use the physical assets as the collateral against the bonds. Hence, common stock is like an ownership, and corporate bond acts as a debt.

2. The companies can issue the securities in two forms: registered or bearer. The registered securities are the most prevalent form of securities in many companies. The companies maintain a proper record of the stock owners or the company's corporate bondholders. The companies have names and addresses of the security on the certificate. On the other hand, the bearer form of the securities has no records of the registered instruments. There is no record of the owners of the instruments of the companies. There is also no record of the transaction of the transfer of the ownership.

3. The companies market the securities by way of investment channels. They use various instruments like equity shareholders, debentures, and corporate bonds. The companies gain by way of an increase in the securities or market appreciation market value. The transactions in the security markets come under the ambit of various authorities. There are securities and exchange boards, stock exchanges to monitor the process of transferring the securities, and maintaining the records.