Business Finance
XACC291 Week 2 discussion question

Question Description

For a little more of a spark consider the following after reading Chapter 10 of our text:  

Why do companies issue bonds? Would you rather buy a bond at a discount or a premium rate? Why?.

Student has agreed that all tutoring, explanations, and answers provided by the tutor will be used to help in the learning process and in accordance with Studypool's honor code & terms of service.

Final Answer

Companies issue bonds to raise capital.  There are many motivations to raise capital, but here are a few: desire to acquire another company, desire to purchase some new property/plant/equipment, desire to perform some research and development, desire to recapitalize the business to pay the owners a dividend, etc....

I would rather buy a bond at a discount because that means I'd be buying it for less than face value (thus, when it expired I'd receive more money back than I paid of the bond in the first place).

Alex Z (997)
University of Maryland

Anonymous
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