Generally, in economic time periods of tight money supply; interest rates on bond issues normally trend upward.

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Generally, in economic time periods of tight money supply; interest rates on bond issues normally trend upward. This rise in interest rates creates a higher interest expense on corporate issued bond for the capital structure. Mitsubishi and other corporations could shift future capital structure funding to more equity through common stock issuances. What are the positive aspects to shifting to equities during higher interest periods on bond issues? What are the negative aspects to such a shift? Is there another alternative?
Common Stock
Common stock is an equity component that represents the worth of stock owned by the shareholders of the company. The common stock represents the par value of the shares outstanding at a balance sheet date. Public companies can trade their stocks on...
Capital Structure
Capital structure refers to a company’s outstanding debt and equity. The capital structure is the particular combination of debt and equity used by a finance its overall operations and growth. Capital structure maximizes the market value of a...
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Exploring Economics

ISBN: 9781439040249

5th Edition

Authors: Robert L Sexton

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