Bonds or Preferred Stock
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How does a company decide whether to issue bonds or preferred stock?
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Solution Summary
This solution compares the fund raising strategies of issuing bonds to preferred stocks and explains the advantages of bonds.
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For any company to decide whether to issue bonds or preferred stock, the underlying aspect is how much ownership they want to give to outsiders. It therefore calls for comprehending that bonds are debt instruments while preferred stock on the other hand are equity instruments. When bonds are issued, the principal borrowed attracts interest over the term of ...
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