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Forms
of Investment
There is a huge number
of forms of investment. Before concluding an investment
contract you should take legal advice. Especially in
questions of company law and tax deductions
participation agreements can be formed in many ways.
The
classical form of investment in a business is to get
shares of a company or corporation. The most common
method of capital procurement is the emission of shares
of a public company.
But
there are many other forms of investment than
shareholding. The main differences are in liability and
arbitrement of the investor. Many possibilities to limit
liability, but to preserve entrepreneurial independence
is so called mezzanine money. This form of financing is
between co-venturing and secured credit.
Other
forms of investment are:
Gilt:
When the government wishes to borrow money, it issues
loan stock, known as gilts. This is a very safe form of
investment since the loan is guaranteed by the
government. The price of gilts moves up and down to
reflect the going interest rate.
Warrants:These are securities, which give the holder the
right to subscribe to shares in a company at a given
price and at fixed dates.
Option:
The right, but not the obligation, to buy or sell
securities at a fixed price within a specified period.
Derivative: This is a general term for any financial
instrument which gives the option to buy or sell shares
at a predetermined price - warrants and options are
examples of this.
Traded
options: These are similar to options but can be sold on
to someone else before the expiry date.
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