In Practice A Financing Checklist for Classifying Securities

Some new securities, at first sight, are difficult to categorize as either debt or equity. To check where on the spectrum between straight debt and straight equity these securities fall, answer the following questions:

1 The veto power is usually exercised through covenants in bond agreements.

1. Are the payments on the securities contractual or residual?

• If contractual, it is closer to debt

• If residual, it is closer to equity

2. Are the payments tax deductible?

3. Do the cash flows on the security have a high priority or a low priority if the firm is in financial trouble?

• If it has high priority, it is closer to debt.

• If it has low priority, it is closer to equity.

4. Does the security have a fixed life?

5. Does the owner of the security get a share of the control of management of the firm?

Retirement Planning For The Golden Years

Retirement Planning For The Golden Years

If mutual funds seem boring to you, there are other higher risk investment opportunities in the form of stocks. I seriously recommend studying the market carefully and completely before making the leap into stock trading but this can be quite the short-term quick profit rush that you are looking for if you am willing to risk your retirement investment for the sake of increasing your net worth. If you do choose to invest in the stock market please take the time to learn the proper procedures, the risks, and the process before diving in. If you have a financial planner and you definitely should then he or she may prove to be an exceptional resource when it comes to the practice of 'playing' the stock market.

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