Question

3/ Explain why investors might be interested to purchase, "your newly created debt instrument" 34pts

Answer 1

Debt instruments are ideally issued by a corporate when in need of money and has two options, either to take bank loan or to issue a debt instrument. bank loans are ideally costlier then debt instruments. Te issuer invites public to subscribe their debt instruments, where they get the guarantee of getting their principal back and they get a fixed interest until the principal is returned. since it is regulated by a third party body, investor is confident about getting the principal and return back. Also, investor is open to do research on my company, what is my business and what is my financials in previous few years. interest paid to investor is called coupon rate, interest is paid as per schedule promised during investment. There also also some rating agencies which provide genuine ratings of company which boost morale of investor.

Hence, getting into a legal contract, having guarantee of getting principal and periodic interest, investing through proper research and having guided by genuine rating can attract an investor to invest in my newly created debt instrument.

I hope the explanation is sufficient, pls let me know if you need any further help.