Singular trading is a locally listed company. The Board of Director suggests either issuing bonds or shares in order to raise capital for a new project:

Can you suggest advantage and disadvantage for issuing shares and bonds from view of shareholders? Explain. 

Suppose the company issues 4 percent annual pay bond with a face value of $1,000 that matures for resting 8 years. If the yield to maturity is 5 percent, what is the price of this bond? 

Suppose the preferred share is expected to pay a $5 dividend for every quarter and the required return is 6 percent yearly. What is the price of this preferred share?

Suppose the company just paid a dividend of $3. It is expected to increase its dividend by 2 percent each year. If the required return is 15%, how much should the value of stock be? 

Answer rating: 100% (QA)

Advantages and disadvantages of issuing shares and bonds from the perspective of shareholders Issuing Shares Advantages 1 Ownership and Control Shareholders have ownership rights in the company allowi... View the full answer