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Bonds/regarding bonds and equities

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Expert: Doug Ingram - 10/10/2007


Question
a company will go bankrupt next year, which one do i  hold,
bond issued by the company or equities issued by the company and Why?

thanking you
reddy

Answer
The best answer is neither!
However, Bond holders are protected more than stock holders and have the best shot at recovery due to a priority claim on the assets of the company.
Additionally, some bonds may also have higher priority than others, but, generally speaking, equities have no claim on assets.

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Doug Ingram

Expertise

Fixed income portfolio allocation and strategies for institutional investors. Having designed multi-scenario risk quantification and cash flow projection models for nearly 25 years, Strategic Technical Initiatives can answer your regulatory, SFAS 115 allocation, securities selection, and other questions dealing with yield curve placement and portfolio mix strategies. I write the Bond Market Review on behalf of Commerce Street Capital Management.

Experience

Trading and designing portfolio strategies since 1980.

Education/Credentials
Physics and Differential Mathematics

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