Long-term debt finance - part 2

In this lesson

1. 0:00 Bonds and long-term debt characteristics
2. 1:06 Redeemable and irredeemable bonds explained
3. 2:16 Security, tradability, and bond terminology
4. 3:00 Convertible bonds and investor benefits
5. 4:03 Deep discount bonds and capital gains
6. 5:06 Zero coupon and Eurobonds overview
7. 6:35 Exam question: true statements about debentures
8. 9:02 Summary of bonds and debt financing

About this lesson

This knowledge is essential for FM, AFM, and SBL papers, where debt financing structures appear regularly in exam questions. The video covers the practical features that make bonds attractive to both investors and companies. You'll understand security, marketability, and why bonds are tradeable, giving investors flexibility to exit their investment early. The lesson also explores specific bond types you need to recognise: convertible bonds (which offer the choice to convert to shares), deep discount bonds (issued well below par value), zero coupon bonds (paying no interest but sold at a discount), and Eurobonds (foreign currency debt used for international matching). Each type has distinct tax and financial advantages depending on the investor's or company's situation. The lesson concludes with a worked example question showing how these concepts are tested in your exam. You'll learn to distinguish between the fixed book value of bonds and their fluctuating market value, understand why investors can confidently budget for fixed interest payments, and recognise why bonds offer tax advantages over equity for the issuing company. By the end, you'll be able to identify bond characteristics accurately and apply them to case study scenarios.

Duration: 10m