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If you sell a bond, you are agreeing to buy it back later at a higher price. Thus you are really just giving yourself a loan.
On the other hand, if you sell the actual stock, you are losing some of the control of the company, as the new owner can vote those shares.
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When seeking long-term financing an advantage of issuing bonds over issuing common Stock is that stockholder control is not affected?
TRUE
Which of the following is not an advantage of issuing bonds instead of common stock?
Earnings per share on common stock are always lower.
What is the advantage of issuing stock?
It allows the corporation to raise capital.
Why does asymmetric information push companies to raise external funds by borrowing rather than by issuing common stock?
someone goes to the university of aberdeen
What is one major expense associated with issuing new shares of common stock?
Underpricing is one major expense associated with issuing new shares of common stock.
When seeking long term financing an advantage of issuing bonds over issuing common stock is that stockholder control is not affected?
TRUE
When seeking long-term financing an advantage of issuing bonds over issuing common Stock is that stockholder control is not affected?
TRUE
Which of the following is not an advantage of issuing bonds instead of common stock?
Earnings per share on common stock are always lower.
How do corporations raise cash?
In addition to issuing bonds, corporations may borrow directly from any loan source, such as banks. On occasion, corporations raise needed cash by authorizing and selling additional stock.
What is the advantage of issuing stock?
It allows the corporation to raise capital.
A big advantage of preferred stock is that preferred stock dividends are tax deductible for the issuing corporation?
Not in the US, anyhow.
What three forms does Equity financing come through?
selling stock,issuing bonds investment
What is an example of watered stock?
Watered stock is stock that is issued with a price that is much higher than the issuing company's assets. Watered stock can be stock that is overvalued due to excessive issuing or inflated accounting values.
What is a journal entry to buy equipment with common stock?
Equipment is not actually bought using common stock rather it is purchased from cash by issuing common stock so journal entry is : [Debit] Equipment [Credit] Cash / bank
Why does asymmetric information push companies to raise external funds by borrowing rather than by issuing common stock?
someone goes to the university of aberdeen
What is one major expense associated with issuing new shares of common stock?
Underpricing is one major expense associated with issuing new shares of common stock.
Each time securities are traded on the secondary marker the issuing corporation receives?
nothing immediately monetary, but should they make an offering of unissued stock, give stock options as incentives or have convertible bonds, the price of stocks on the secondary market will effect these values
