Capitalism 2 and Capitalism Lab Forum

I would love to have the ability to buy bonds. This way I can be more strategic about taking on debt vs issuing shares. Issue bonds when interest rates are low to lock in the price (for long-term projects) that also have a high prepayment fee to compensate the "investors" for the risk of the player paying off the bond early. This will allow the player to assume the risk of a falling interest rates (paying higher interest since the rate is locked in) but is protected against rising interest rates. Very important for real estate developers since the cashflow is relatively stable regardless of interest rates-- a 4.5% increase which is common in Cap Labs crushes my companies with interest if I don't have time to repay enough of my loans before the rates go up). This is how it works in the real world. Also, if we can make shell corporations I can create CDOs, ABSs, and possibly CDSs. Yes, I would like to bring wall street to capitalism

A bond issue is not a bad idea. Perhaps fees could be added per issue as a cost for borrowing this way. I agree about adding either prepayment penalties or simply not allowing bonds to be repaid until maturity (worse option).

If the developers want to expand on the bond aspect, a market for bonds, like the existing one for stocks, could be created. Bond prices move in the inverse of interest rates and credit worthiness is also a consideration. The player could issue bonds when interest rates are low and then buy them back at a discount if and when interest rates rise, though it really depends upon the maturity of the bonds. The closer to maturity, the less effected prices are by interest rate movements and the closer to par value they get. Perhaps this would be too easily abused?

+1

*looks for Esoteric Rogue*

WilliamMGary wrote:*looks for Esoteric Rogue*

Adding corporate bonds is probably the natural progression; well before my feared tipping point
I'm not against it, but I might abstain.

Thanks for noticing me! [Edited to completely re-write]

Finance should be an expansion to Cap LAB.

Yea, I'm still try to get away from my streamlining / downsizing vision that I had for multiplayer, since this is not!

To be clear, once I understood that bonds and stocks in the real world are both regarded as securities rather than another money market, it seems only natural to include them.

Understanding that bonds can be traded and that the value is usually negotiable, I would be excited to see how a bond market would work. I have never followed bonds in the real world.

Bonds are pretty simple. Based on the credit rating of the company that is issuing the bond they know that investors are willing to loan money to them between certain interest ranges. For the duration of the bond the company pays interest to the investor and when the bond term ends, the investor gets principal back in addition to the interest he earned during elapsed time period. This is if everything works out as designed

WilliamMGary wrote:Bonds are pretty simple. Based on the credit rating of the company that is issuing the bond they know that investors are willing to loan money to them between certain interest ranges. For the duration of the bond the company pays interest to the investor and when the bond term ends, the investor gets principal back in addition to the interest he earned during elapsed time period. This is if everything works out as designed

Yea, that seems straightforward between just the issuer and the investor. But I understand bonds are traded on the market, too. It's an all-new reindeer game, to me.

I proposed this a few months ago, but I think that this will be quite complicated.
However, I think that a "finance" pack would be great, for a game named "capitalism"!

Bonds will be an amazing add to capitalism! Ive been looking forward to improvements in the stock exchange, it seems pretty bland the way it sits now.

_edited_