Derek Moran
Security [BOND]: essentially, a LOAN AGREEMENT representing a DEBT.
In return for the CAPITAL given to a corporation or a GOVERNMENT ENTITY, the bondholder gets a promise of repayment of of PRINCIPAL and INTEREST overtime, instead of ownership rights. Since the HOLDER of a BOND is a CREDITOR instead of an owner, his CLAIMS against the assets of a corporation are satisfied first in case of a failure of the business venture. Most bonds are secured by some kind of COLLATERAL, so that in case of default, the debt might still be satisfied. Consequently, bonds are generally a lower risk investment. Bonds raise money commonly known as DEBT CAPITAL.