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A bond is a written promise to pay an amount identified as the par value of the bond along with interest at a stated annual rate. The par value or face value is the amount paid at the maturity date of the bond. A bond is a liability to the borrowing or issuing corporation. The stated interest rate is also referred to as the coupon rate. Interest may be paid annually, semi-annually or some other fraction of the year.

In the space below, write the following:

1. Identify and describe one advantage of issuing bonds.

2. Identify and describe one disadvantage of issuing bonds.

3. Explain, whether you would consider using bonds to finance the operations of a company for which your worked. Give at least one reason to support your answer. In so doing, include in your answer relevant material regarding bonds that was taught during class.