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    Debt and Stock Securities

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    Why is it that corporations invest in debt and stock securities and in accounting for debt investments and equity investments?

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    Corporations invest in debt and stock to be able to leverage on their investments (debt) and to raise money for future projects and to maximize shareholder equity (stock securities). The way a corporation leverages debt is by investing in plants and equipment, which are considered fixed assets, using debt via bank loans or the issuance of bonds. The company then figures out the breakeven point to see when ...

    Solution Summary

    This solution discusses why corporations invest in debt and stock securities.