Raising funds by selling stock rather than selling bonds

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Reference no: EM131448912

An advantage of raising funds by selling stock rather than selling bonds is that

a. issuing stock places no financial obligations on the firm (no legally required future payments to the bond owners)

b. issuing bonds dilutes (reduces) the claims of the firm's owners

c. when a share of stock matures the owner is only entitled to the par value of the stock, which is usually very small (one dollar or less)

d. issuing stock strengthens the control of the original founders of the corporation

e. both (a) and (c) are correct answers

Reference no: EM131448912

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