Big Rock’s directors are looking to expand into a new suite of services. Although they  are doing quite well in their existing lines of business, analysts have identified some new  areas for development. One of these is expansion into manufacturing prefabricated  homes. However, this venture requires a large amount of funding. To raise additional  funds to finance this new project, the company is considering issuing a new bond.  Required:  a. Explain what a corporate bond is,  b. Outline the characteristics of the bond market,  d. Explain the benefits of issuing bonds to raise financing.

Financial Management: Theory & Practice
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ISBN:9781337909730
Author:Brigham
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Chapter21: Dynamic Capital Structures And Corporate Valuation
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Big Rock’s directors are looking to expand into a new suite of services. Although they 
are doing quite well in their existing lines of business, analysts have identified some new 
areas for development. One of these is expansion into manufacturing prefabricated 
homes. However, this venture requires a large amount of funding. To raise additional 
funds to finance this new project, the company is considering issuing a new bond. 
Required: 


a. Explain what a corporate bond is, 
b. Outline the characteristics of the bond market, 
d. Explain the benefits of issuing bonds to raise financing.

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