1. TASK: Insert the appropriate word in the text below:
adhere – advantages – deductible – dilute - formal
interest – IOU - issuing - lender - long-term
lower - maturity date – principal – requires – whereas
Bonds are a form of ___________debt. You might think of a bond as an ___________ issued by a corporation and purchased by an investor for cash. The corporation ___________ the bond is borrowing money from an investor who becomes a ___________ and bondholder.
A bond is a formal contract that ___________ the issuing corporation to pay the bondholders
1. ___________ every six months based on the bond's stated interest rate, and
2. The ___________ or face amount on the bond's ___________.
There are two significant ___________ for a corporation to issue bonds instead of common stock:
1. Bonds will not ___________ the ownership interest of the stockholders, and
2. Bonds have a ___________ cost than common stock.
Bonds have a lower cost than common stock because of the bond's ___________ contract to pay the interest and principal payments to the bondholders and to ___________ to other conditions. A second reason for bonds having a lower cost is that the bond interest paid by the issuing corporation is ___________ on its U.S. income tax return, ___________ dividends are not tax deductible.
2. CHECK YOUR SPEAKING
|
adhere |
[ ədˈhɪər ] |
притримуватися |
|
advantages |
[ ədˈvɑːn.tɪdʒ ] |
переваги |
|
deductible |
[ dɪˈdʌk.tɪ.bl̩ ] |
підлягає відрахуванню |
|
dilute |
[ daɪˈluːt ] |
розбавляти |
|
formal |
[ ˈfɔːml ] |
формальний |
|
Interest |
[ ˈɪntrəst ] |
процент |
|
IOU |
[ ˌaɪ.əʊˈjuː ] |
боргове зобов'язання |
|
issuing |
[ ˈɪʃ.uː ] |
випусковий |
|
lender |
[ ˈlen.dər ] |
кредитор |
|
long-term |
[ lɒŋ ] [ tɜːm ] |
долгостроковий |
|
lower |
[ ˈləʊ.ər ] |
меньший |
|
maturity date |
[ məˈtjʊə.rɪ.ti ] [ deɪt ] |
строк погашення |
|
principal |
[ ˈprɪn.sɪ.pəl ] |
тіло кредиту |
|
requires |
[ rɪˈkwaɪər ] |
вимагає |
|
whereas |
[ ˌweərˈæz ] |
в той час як |
3. SEE CORRECT ANSWER
Bonds are a form of long-term debt. You might think of a bond as an IOU issued by a corporation and purchased by an investor for cash. The corporation issuing the bond is borrowing money from an investor who becomes a lender and bondholder.
A bond is a formal contract that requires the issuing corporation to pay the bondholders
1. Interest every six months based on the bond's stated interest rate, and
2. The principal or face amount on the bond's maturity date.
There are two significant advantages for a corporation to issue bonds instead of common stock:
1. Bonds will not dilute the ownership interest of the stockholders, and
2. Bonds have a lower cost than common stock.
Bonds have a lower cost than common stock because of the bond's formal contract to pay the interest and principal payments to the bondholders and to adhere to other conditions. A second reason for bonds having a lower cost is that the bond interest paid by the issuing corporation is deductible on its U.S. income tax return, whereas dividends are not tax deductible.
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