Apple said this week it is increasing and extending its shareholder-returns program and said it would tap the bond market at home and overseas to fund the program. Apple first issued bonds to finance huge buybacks and dividend payments, rather than repatriate (return to the U.S.) the roughly $250 billion in cash it holds outside of the U.S., which would be subject to a 35% corporate tax rate. Apple's bonds sold at $1.02 for each dollar in face value.

1. Did Apple issue the bonds at a discount or premium based on the information above? If issued at a discount, describe what this means; if issued at a premium describe what this means.

2. Why would Apple issue bonds rather than common stock to raise capital? Consider the advantages and disadvantages of each form of raising capital in your answer.