Question
Please respond to these arguments. A) The decision to opt for equity, bond and bank capital depends upon various factors Debt financing like bonds is
Please respond to these arguments.
A) The decision to opt for equity, bond and bank capital depends upon various factors
Debt financing like bonds is always favorable if the amount is low
Equity finance is always a good option for startups as they do not have a market presence hence banks and bonds are not an option for them
Bank capital is a better option for large companies for large amounts, as banks can provide large sums at low interest., plus in case of any issue there is the chance of restructuring of loan or add-on's like during the pandemic, majority of banks provided relief to large corporate buyers helping them to avoid defaults
If Company wanted to secure long-term finance and repayment as per his own wish, he can opt for bonds. Bonds have long-term maturity features like 10yrs,15yrs, and repayment can be scheduled as per the company's requirement.
B)A corporation may select which is the most consistent alternative for investor startups with the help of equality. As a result, they have no presence in the banking sector, and the bond market is not an option. Bonds can be useful as well, but only if the amount is modest enough to be affordable. For large enterprises, bank debt is a superior alternative since banks can give significant sums at low-interest rates. Bonds appear to be the best option in my opinion. For a stable long-term commitment, repayments can be made on the terms of the business. Bonds can be repaid over a period of up to ten years, depending on the demands of the business.
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