Sources of external funding available to corporation-equity

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Reference no: EM13882026

As you will learn from your reading, there are basically only two sources of external funding available to a corporation: equity and debt. Choose one of the following topics and present your analysis, which may include your personal opinions:

Suppose you decide to invest in corporate bonds. Accordingly, you visit a bond store. You see 3 bonds on the shelf. One is priced at $1,015.53, another is priced to sell at $1,300.00, and a third is selling at a discounted amount of $876.06. All have a $1,000.00 face value, and carry equal risk. From your reading, and from class lecture, you know that you will be earning the same rate on your investment, regardless of which bond(s) you purchase. But you have a friend with you, who doesn't understand how you can possibly earn the same interest rate, due to the difference in purchase price. How will you explain this concept to him or her?

Reference no: EM13882026

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