Quote Originally Posted by semi-ambivalent View Post
I am not a financial guru but I was always under the impression bondholders made a return based on the risk of their investment, much like stockholders. The assets of a company, including sales history and estimates of future sales, serve to indicate the potential risk to payback to the bond purchaser but are not themselves used as collateral for bonds. How can they be, they're owned by the stockholders? The bonds might not be repaid. That's the risk you took on the chance of some return. This is why I can take part in a bond sale by Kodak without owning any shares of Kodak stock. And vice versa.

Of course a company's Board can write whatever agreement they want but doesn't doing so imply Kodak was selling risk-free investment? I'm probably completely wrong; that's why I let others manage my vast empire of holdings.

s-a
Speaking very broadly, I's suppose it depends what is meant by "Bond" in the particular country or jurisdiction. Here in the UK there are lots of "Bonds"...it's really just another name for a loan. But, like any loan or mortgage, it may (or may not) be secured, perhaps on specific assets of a business.

I've not studied EK's account, but I suppose that Bonds could be secured on the specific collateral of patents or some other asset? IDK?

e.g. I have a mortgage loan on my house....I own the house, and the bank demands a rate of interest to reflect the risk of me not paying back their investment. However, if I went bankrupt, they would have a "first charge" on the house...so they would have their loan fully repaid from the sale of the house, before any other creditors had anything paid off their debts. Similar, if or when I move house, I have to arrange to either repay the bank, or arrange for the loan to be secured against the collateral of my next house.