As presented in Exhibit 24.1, review stocks and bonds and describe how they differ in regards to corporate financing.Discuss common stock and preferred stock.What are the types of corporate alternative financing?

Here is the chart of exhibit 24.1: Left side is stocks right side is bonds

How Do Stocks and Bonds Differ?

STOCKS BONDS

1. Stocks represent ownership. 1. Bonds represent debt.

2. Stocks (common) do not have a fixed dividend rate. 2. Interest on bonds must always be paid, whether or not any profit is earned.

3. Stockholders can elect the board of directors, which controls the corporation. 3. Bondholders usually have no voice in, or control over, management of the corporation.

4. Stocks do not have a maturity date. The corporation usually does not repay the stockholder. 4. Bonds have a maturity date, when the corporation is to repay the bondholder the face value of the bond.

5. All corporations issue or offer to sell stocks. This is the usual definition of a corporation. 5. Corporations do not necessarily issue bonds.

6. Stockholders have a claim against the property and income of a corporation after all creditors' claims have been met. 6. Bondholders have a claim against the property and income of a corporation that must be met before the claims of stockholders.