LOAN STOCK Meaning and
Definition
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Loan stock refers to a type of financial security or bond that is issued by a company or government entity to raise capital. It represents a long-term loan made by investors to the issuer, who agrees to repay the principal amount at a predetermined future date, typically with periodic interest payments. Loan stock is also known as a debenture or a fixed-income security.
In essence, loan stock allows a company or government to borrow money from investors by promising to repay the loaned amount within a specified time frame. This type of security is typically used by organizations to finance long-term projects, fund expansion, or refinance existing debt.
Loan stock usually comes with a fixed interest rate, which is predetermined at the time of issuance. The interest payments are made periodically, such as annually or semi-annually, providing investors with a regular income stream. While the interest payment is fixed, the value of loan stock may fluctuate in response to changes in market conditions, interest rates, and the creditworthiness of the issuer.
Investors who hold loan stock have a claim on the company's assets in case of bankruptcy or default. However, loan stockholders generally have a lower priority compared to other creditors, such as secured bondholders or banks, in the event of liquidation.
Overall, loan stock serves as a financing tool that allows companies and governments to access capital while providing investors with a fixed income investment option.
Common Misspellings for LOAN STOCK
- koan stock
- poan stock
- ooan stock
- lian stock
- lkan stock
- llan stock
- lpan stock
- l0an stock
- l9an stock
- lozn stock
- losn stock
- lown stock
- loqn stock
- loab stock
- loam stock
- loaj stock
- loah stock
- loan atock
- loan ztock
- loan xtock
Etymology of LOAN STOCK
The word "loan stock" is a compound term composed of two separate words: "loan" and "stock".
- "Loan" comes from the Old Norse word "lána", which means "to lend". It entered Middle English as "loane" and eventually evolved into "loan", referring to money or property given temporarily with the expectation of being returned.
- "Stock" has its origin in the Old English word "stoc", which initially meant "a tree stump or post". Over time, it expanded to denote the whole timber used for construction. The term later extended its meaning to include an accumulation of assets, particularly merchandise or funds invested in a business.
When combined, "loan" represents the debt-like aspect of the financial instrument, while "stock" indicates the ownership or investment component.
