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Explanation of Finance Questions: Bonds

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Why do companies issue bonds? Would you rather buy a bond at a discount or a premium rate? Explain why or why not. What is the determining factor of whether a bond is sold at a discount, face, or premium?

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This solution provides a detailed discussion of bonds.

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Companies issue bonds to raise money for their operations. Along with selling equity, it is one of the two major ways a company can get cash to do things like making investments in technology and acquiring other companies. In issuing a bond, a company is saying to potential investors, "You give me money now, and we'll pay you interest every year at a higher ...

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