--%>
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 : Next Generation Manufacturing Strategy

    This Assignment assesses the following module Learning Outcomes:1. Describe current production concepts and techniques in formulating a manufacturing strategy.2. Discuss the development and implementation of manufacturing strategies in the busi

    		•
  • Q : Risky forms of production to gain

    Entrepreneurs: (w) undertake risky forms of production to gain uncertain profits. (x) obtain interest payments for their services. (y) are usually overcompensated for their innovations. (z) receive virtually all their wealth by inheritance.

  • Q : Neoclassical and heterodox production

    One of my friends can't discover the answer of this question. Give solution of this question. Neoclassical production and cost theory is more realistic than and cost theory and heterodox production. Discuss.

    		•
  • Q : Explain about the principle of

    Economic efficiency needs that, relative to the other goods which different individuals might consume, the people who value exact goods relatively the most should own and/or use all goods. Such principle is termed as: (i) economic equity. (ii) allocat

    		•
  • Q : Demand often exceeds supply and supply

    “In the corn market, demand often exceeds supply and supply sometimes exceeds demand.” “The price of corn rises and falls in response to changes in supply and demand.” Among these 2 statements used correctly which in the terms “supply&rdq

    		•
  • 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 : Affects the location of the production

    Explain how, if at all, each of the following affects the location of the production possibilities curve?

    		•
  • Q : Explain the term Operating Leverage

    Briefly explain the term Operating Leverage?

    		•
  • Q : Illustrate the 4th role is the

    Illustrate the 4th role is the reallocation of resources?

    		•
  • Q : Capitalism-Tightly regulate business I

    I have a problem in economics on Capitalism-Tightly regulate business. Please help me in the following question. The govt. in a purely capitalist state would not: (1) Find out the property rights. (2) Enforce contracts among private parties. (3) Offer

    		•