Podcast
Questions and Answers
What factor contributes to the ultimate security of a bond?
What factor contributes to the ultimate security of a bond?
- The underlying company's stability (correct)
- The company's stock performance
- Interest rates in the market
- Global economic conditions
What type of insurance is provided for the bonds mentioned?
What type of insurance is provided for the bonds mentioned?
- Unemployment insurance
- Full coverage insurance from Zurich (correct)
- Federal insurance
- Life insurance
What is a key characteristic of franchise bonds mentioned in the content?
What is a key characteristic of franchise bonds mentioned in the content?
- They are backed by small businesses.
- They are always unsecured.
- They feature large capital reserves and good trading prospects. (correct)
- They require full payment upfront.
How much capital access is guaranteed at a minimum for the bonds discussed?
How much capital access is guaranteed at a minimum for the bonds discussed?
What is the maximum investment amount for the most popular bond mentioned?
What is the maximum investment amount for the most popular bond mentioned?
What type of tax advantage does the capital gains tax bond offer?
What type of tax advantage does the capital gains tax bond offer?
Which franchises does the company work with?
Which franchises does the company work with?
What is NOT mentioned as a method of securing a bond?
What is NOT mentioned as a method of securing a bond?
What component does a franchise bond typically offer to an investor?
What component does a franchise bond typically offer to an investor?
What is meant by the yield of a bond?
What is meant by the yield of a bond?
Which statement best describes a typical feature of a franchise?
Which statement best describes a typical feature of a franchise?
What advantage do franchise bonds often provide to investors?
What advantage do franchise bonds often provide to investors?
How does a franchise typically generate income according to the content?
How does a franchise typically generate income according to the content?
Before equity, what financial instrument was primarily sold to gather capital?
Before equity, what financial instrument was primarily sold to gather capital?
What is a typical characteristic of bonds that have fixed maturity values?
What is a typical characteristic of bonds that have fixed maturity values?
What percentage of McDonald's locations are franchises?
What percentage of McDonald's locations are franchises?
Flashcards
What is a franchise?
What is a franchise?
A type of license that grants a franchisee access to a franchisor's business knowledge, processes, and trademarks, allowing the franchisee to sell a product or service under the franchisor's business name.
What is a bond?
What is a bond?
A contract where an investor lends money to a borrower in exchange for a fixed rate of interest and the return of the initial investment on an agreed date.
What is a franchise bond?
What is a franchise bond?
A type of bond where a franchise agrees to pay an investor a fixed return and their capital back on a pre-set maturity date. These often carry security and insurance and the underlying business is often a blue chip company with strong revenues.
What is yield?
What is yield?
Signup and view all the flashcards
Do I make capital growth (with bonds)?
Do I make capital growth (with bonds)?
Signup and view all the flashcards
Is a franchise bond secure?
Is a franchise bond secure?
Signup and view all the flashcards
What is bond maturity?
What is bond maturity?
Signup and view all the flashcards
What is bond insurance?
What is bond insurance?
Signup and view all the flashcards
What is bond minimum investment?
What is bond minimum investment?
Signup and view all the flashcards
What are Franchise bonds?
What are Franchise bonds?
Signup and view all the flashcards
What is bond liquidity?
What is bond liquidity?
Signup and view all the flashcards
What are capital gains?
What are capital gains?
Signup and view all the flashcards
What is a capital gains tax bond?
What is a capital gains tax bond?
Signup and view all the flashcards
Study Notes
Franchise Information
- A franchise is a license granting access to a franchisor's business knowledge, processes, and trademarks. Franchisees sell products/services under the franchisor's name.
- McDonald's is a large and successful franchise operator.
- Over 80% of McDonald's locations are franchises.
- A typical UK McDonald's franchise generates approximately £4.5 million annually.
Bond Information
- A bond is a contract offering interest in return for a loan.
- Bonds are the oldest financial instruments in global economies.
- Governments and companies issue bonds to raise capital.
- Bonds promise to pay interest and return the initial investment at a future date (maturity).
- Bonds have a fixed income return.
Franchise Bond Information
- A franchise bond is when a franchise agrees to pay a fixed return and principal to an investor by a fixed maturity date .
- These bonds often have security and insurance with successful underlying companies.
Bond Yield
- Yield is the return that a bond pays to an investor, expressed as an annualised percentage.
- Example: A 5% yield means an investor gets 5% of the original investment annually.
Bond Capital Growth
- Bonds can generate capital growth alongside fixed income.
- Potential for capital growth is higher for bonds that become listed.
Bond Security
- Bonds provide varying degrees of security.
- Security depends on the underlying company.
- Bonds can have insurance from companies like Zurich, a large global player.
Accessing Bond Capital
- Bond maturity dates and capital access points vary.
- Some bonds are traded or sold immediately.
- Most bonds offer capital access after 12 months.
- Some companies offer capital access after 4 months.
Minimum and Maximum Investment
- Minimum and maximum bond investment amounts vary by bond terms.
- A previous McDonald's bond had a minimum of £100,000 and a maximum of £950,000.
Tax on Bond Income
- Bond income is often taxed, either at source or paid gross.
- Some bonds offer capital gains tax deferral.
Partnered Franchises
- Simmonds & Simmonds work with large franchises like McDonald's, Starbucks, Pizza Hut, Wendy's.
- All partnership franchises must meet GFA approval.
Studying That Suits You
Use AI to generate personalized quizzes and flashcards to suit your learning preferences.
