Investment credit instrument discussion

1. INVESTMENT
CREDIT
INSTRUMENT

2. Investment credit instruments are those
which earn income in the form of dividends
or interest.
These are stocks and bonds.

3. Bonds are promises to pay the principal as well
as the interest to the holder at a certain specified time
indicated on the face of the instrument.
They Represent as indebtedness on the part of
the issuing corporation. In the issue, the corporation
is called the bond issuer or the debtor; the bondholder
is the creditor.
The corporation has the obligation to honor its
commitment to the bondholder redeeming the bond
issued when it measures, to pay the principal as well
as interest earned. Advantages of both are

4. a) It represents a safe form of investment, that the company
must honor its obligation of paying its indebtedness to the
bondholder upon maturity regardless of whether it is losing
or making profits.
b) It can be use as collateral to support loans sought by the
bondholder from financial institutions.
c) Transfer to another holder is easily done by mere
endorsement and delivery of the instrument

5. Stocks are permanent invested capital of a
corporation contributed by the owners (stockholders)
which are evidence by certificates.
It represents the stockholder’s right to a certain
portion of the assets of a corporation upon liquidation
and certain shares of the profits after prior claims have
been paid.
Stocks are transferable to third parties in such
way that the holder, may in normal times, obtain
immediate cash through the sale of said stock.

6. Kinds of stocks are common stock and
preferred stock:
• Common stocks are with voting right. One share is equivalent to
one vote. The common stockholder receives portion of the
corporate income which remains after all other claimants have
been satisfied.
• Preferred stocks are given preference to assets , dividends
declarations of payments. They have right to a fixed dividend
higher that common shares, and secondary to the interest on all
classes of bonds and notes.

7. COMMERCIAL CREDIT
INSTRUMENTS AND
CHECKS

8. •Commercial Credit Instruments
These documents are used during
business transaction to replace cash.
These instruments are the promissory
notes, checks, bank draft, bill exchange and
bank deposits.

9. A promissory note is a written promise
by a person, called the maker, to another
party, the payee to pay a definite sum of
money at a certain future time.

10. A promissory note is a written promise
by a person, called the maker, to another
party, the payee to pay a definite sum of
money at a certain future time.

11. CHECKS
A check is a written order drawn by a depositor, the
drawer, upon a bank, the drawee, to pay on demand or at
a future determinable time sum of money to order or
bearer, the payee.

12. CHECKS
A check is a written order drawn by a depositor, the
drawer, upon a bank, the drawee, to pay on demand or at
a future determinable time sum of money to order or
bearer, the payee.