Answered: 1) (20) Why do corporations issue…

1) (20) Why do corporations issue bonds instead of common stock? What issues do corporations need to consider when issuing debt? How can a corporation reduce the interest expense of issuing bonds?

SWFT Corp Partner Estates Trusts

42nd Edition

ISBN:9780357161548

Author:Raabe

Publisher:Raabe

Chapter4: Corporations: Organization And Capital Structure

Section: Chapter Questions

Problem 14DQ

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Which of the following is a difference between stocks and bonds? A. Bonds may be issued by corporations or government; stock is only issued by corporations.B. Stock may be issued by corporations or government; bonds are only issued by corporations.C. Bonds are only issued by government; stock is only issued by corporations.D. There is no difference in terms of who issues stocks and bonds.
When corporations issue bonds, there are two distinct obligations. What are those obligations? What do the following terms mean in regard to corporations issuing bonds: convertible, callable, and debenture?
Which of the following are differences between a bond and a common stock? (Select all that apply.) A. A corporation has to pay all bondholders before paying stockholders. B. A bond is a claim on the earnings and assets of a corporation, whereas a common stock promises to make periodic payments for a specified period of time. C. A corporation has to pay all stockholders before paying bondholders. D. A bond is a debt instrument that entitles the owner to receive periodic amounts of money until its maturity date, whereas a common stock represents a share of ownership of the institution that has issued the stock.
when are corporations likely they called the Bonds? A. When the market interest rate is higher than the contract rate, b. When the contract rate is higher than the market rate. C. When their bonds at selling at par with market d. When standard and poor are bullish about treasury bills E. None of the above
True (t) or False (f) _____ Bond interest paid by a corporation is an expense, whereas dividends paid are not an expense of the corporation
Which of the following statements about the characteristics of debt and equity is true? a. All of the statements are true b. They can both be long-term financial instruments. c. They both involve a claim on the issuer's income. d. They both enable a corporation to raise funds.
Which of the following is not a primary source of corporate debt financing? a. Bonds. b. Notes. c. Leases. d. Receivables.