In today's post, I want to take the time to go over the many categories and various elements that defines debt. As many people have a general knowledge of what debt is, let's take a more in-depth look at all the variables.
To begin, what is credit and how is it best described? Credit can be defined as one party, the lender, loaning money to another party, the borrower, and in return, they earn what is called interest. From credit, we go to interest. Interest is money, referred to as a fee, which is paid to the lender for lending the borrower the money.
According to Wikipedia, "a bond is simply a loan in the form of a security with different terminology: The issuer is equivalent to the borrower, the bond holder to the lender, and the coupon to the interest. Bonds enable the issuer to finance long-term investments with external funds."
Next, let's explain what security is. Security is a financial tool whose flexibility is both negotiable, as well as interchangeable, and is used to signify monetary worth. Often, securities are be divided and classified as bonds and debentures, equity securities, and banknotes."
...Stay tuned, there's more to follow!!
