--%>
Assignment Help - homework help

The financial investor about bonds

Describe three ways to finance corporate activity.  Make a case that stocks are more risky for the financial investor than are bonds?

E

Expert

Verified

There are three ways to finance corporate activity: it can be done internally out of undistributed profits or Corporations can borrow from financial institutions or issue their own stocks or bonds.

Common stock is an ownership share in a corporation that gives a holder voting rights and a share of dividends. Bonds are promissory notes where the corporation promises to pay the holder a fixed amount in the future plus annual interest on the loan.  A bondholder is not an owner, only a lender.  Stocks are usually riskier than bonds. Bondholders have a “legally prior claim” against corporate earnings.  Stock dividends cannot be paid until all interest payments due to bondholders are paid.  Interest is guaranteed as long as the company is healthy, whereas dividend depends on profits.

   Related Questions in Business Economics

  • Q : Entrepreneurs and business are at the

    Explain the statements: Entrepreneurs and business are at the helm of the economy.

    		•
  • Q : Explain determining the types of the

    Explain determining the types of the various products that will be produced?

    		•
  • Q : Production function for the game

    Question Can you describe what the production function for the game looks like? (How are labour, capital and resources combined? Are there constant, increasing or decreasing returns to scale?) Answer

    Q : Market structure and pricing decision

    Just need help to see if I am in the right direction if there any think wrong need help with it.

    		•
  • Q : Checkout problem A grocery store chain

    A grocery store chain is considering ways to improve the performance of the waiting lines at their checkout stands. A heavily trafficked checkout stand is monitored for 120 min. In that period, 60 customers have their groceries rung up, and depart from the store. The

    		•
  • Q : Contestable Markets The least probable

    The least probable of the given industries to be a contestable market is: (1) video rentals. (2) pizza delivery. (3) cable television. (4) trucking. Can someone explain/help me with best solution about problem of <

    		•
  • Q : Market Apparent program For the

    For the question below, utilize the given information. The market for gizmos is competitive, with an increasing sloping supply curve and a downward sloping demand curve. With no govt. intervention, the equilibrium price is $25 and the equilibrium quantity is 10,000 gi

    		•
  • Q : Regression Your firm is worried about

    Your firm is worried about being sued for gender discrimination. There is a growing perception that males are being paid more than females in your department. Using the data in the SALARY tab in the Excel file provided, please complete the following using a = .05 a). Do the men appear to earn mo

    		•
  • Q : Describe unexpected deflation Describe

    Describe unexpected deflation?

    		•
  • Q : Reciprocal Trade Agreements Act had

    How Reciprocal Trade Agreements Act had goal of reducing tariffs?

    		•