Ch.14 Discussion topic-no.2: please see posting due date/time; avoid late posting penalty

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5 replies.

As we study Bonds chapter further with detail mechanics and technical issues, such as bond amortization schedule, but at the same time please do not lose sight of understanding of a big picture.

Two main points:

Part 1 discussion point:

Why bonds?, bond issuance (bond offering) versus stock issuance from a corporate perspective in terms of capital need. In other words, what are some ofpros and cons of this two pathways of corporate financingoptions? One, through "Debt Financing" (long term liability section in financial reporting, ch.14) as opposed "Equity Financing" (ch.13 paid-in-capital of equity section of financial reporting)? Please also think about the related concept of "Financial Leverage". Please discuss ups/downs (pros and cons) between the two capital raising/structure.

Part 2 discussion point:

Now everything said and done with bonds, what is thendifference betweenbonds and loans(bonds vs. loans as long-term debt)? Please discuss as many difference as you think of, from a corporation perspective as well as from an investor/lender perspective.