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If I am educated,unemployed but with potential of being employed,got some business running but doing badly because of lack of enough capital.if i have great ideas,creative etc can i issue a bond say for 3 dollar with an interest of say 30% in 6 months to raise the capital.Would you buy it?..Is it feasible?..Is there anybody who has done something similar?

2006-10-02 04:09:51 · 2 answers · asked by smsclubkenya 2 in Business & Finance Other - Business & Finance

2 answers

Bonds are issued by corporations, not individuals -- but they can be issued by privately held corporations. However, access to the bond market is not easy. There are legal fees and investment banking fees.

In general, corporations have three main ways to access the debt markets. They can borrow from banks, they can borrow through the bond market or they can borrow through the Commercial paper market.

Borrowing through commercial paper is only available to high quality companies.

The debt market is available to established companies, and not readily available to small companies that are not known. There are high fixed costs associated with issuing bonds that make it very expensive for companies that are borrowing small amounts. In addition, the bond market does not monitor companies as well as banks, which is why an unknown company has a hard time issuing bonds.

The usual way for small companies to borrow is through a bank. Banks are particularly good at monitoring small companies. There is a cost to this, so interest rates are higher than bond rates. However, fixed costs are a lot lower.

There are people who will lend money at 30% for six months. There are two problems with dealing with them. The first is that their activities are illegal. The second is that they will break your kneecaps if you miss a payment.

2006-10-02 04:19:28 · answer #1 · answered by Ranto 7 · 0 0

I think you had better learn to spell before you attempt it.

2006-10-02 04:17:27 · answer #2 · answered by Anonymous · 0 0

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