Capitalism 2 and Capitalism Lab Forum

In the current 6.1.11, when a company is bankrupted, I notice that the shareholders still get some residual values from their equities whereas the bond holders lose everything. This contradicts with the real world as the bond investors always have the higher priority as a liability takers than the shareholders in case of bankruptcy. This also reconciles with the relative less profit of a bond as it should have less risk comparing to the equity investing.

Also I found the interest rate by taking loans from bank is higher than issuing a bond. This should be the other way as bank credit line always be the first line of credit for companies in the real life. And actually one company can issue as many as bonds it wants while its bank credit amount is limited. If the interest rate of a bond is lower, then I can't see any reason for a company to ever tap the loan from the bank.

lagrelax wrote: ↑Mon Dec 16, 2019 4:03 pm In the current 6.1.11, when a company is bankrupted, I notice that the shareholders still get some residual values from their equities whereas the bond holders lose everything. This contradicts with the real world as the bond investors always have the higher priority as a liability takers than the shareholders in case of bankruptcy. This also reconciles with the relative less profit of a bond as it should have less risk comparing to the equity investing.

I will forward this to the dev team.

lagrelax wrote: ↑Mon Dec 16, 2019 4:03 pm Also I found the interest rate by taking loans from bank is higher than issuing a bond. This should be the other way as bank credit line always be the first line of credit for companies in the real life. And actually one company can issue as many as bonds it wants while its bank credit amount is limited. If the interest rate of a bond is lower, then I can't see any reason for a company to ever tap the loan from the bank.

FYI, according to www.investopedia.com

https://www.investopedia.com/articles/i ... -bonds.asp

"Like people, companies can borrow from banks, but issuing bonds is often a more attractive proposition. The interest rate companies pay bond investors is often less than the interest rate they would be required to pay to obtain a bank loan. Since the money paid out in interest detracts from corporate profits and companies are in business to generate profits, minimizing the interest amount that must be paid to borrow money is an important consideration. It is one of the reasons that healthy companies that don’t seem to need the money often issue bonds when interest rates are at extremely low levels. The ability to borrow large sums of money at low interest rates gives corporations the ability to invest in growth, infrastructure and other projects."

In the current 6.1.11, when a company is bankrupted, I notice that the shareholders still get some residual values from their equities whereas the bond holders lose everything. This contradicts with the real world as the bond investors always have the higher priority as a liability takers than the shareholders in case of bankruptcy. This also reconciles with the relative less profit of a bond as it should have less risk comparing to the equity investing.

This has been fixed in the latest version 6.2.07.

David wrote: ↑Tue Dec 17, 2019 3:46 pm "Like people, companies can borrow from banks, but issuing bonds is often a more attractive proposition.

Just wanted to say that the difference between bank loans and private bonds is not about attractiveness.
From the standpoint of a corporation, it might not care where the money´s coming from, as long as it´s cheap, but from a global prespective it matters a lot if the money comes from the banking sector (be it bonds or otherwise).
In that case, the money supply increases. That´s not something to overlook.