Virtually all long-term financing decisions for any corporation revolve around the decision whether to issue long-term debt (bonds) or equity (stock). Each financial instrument carries different advantages and disadvantages - characteristics that change based on the overall economy and the direction of interest rates.

For Bonds: Examine the methodology used to calculation and determine bond valuation. What do you consider to be the most important factor in determining the valuation of a bond.

For Stocks: Also examine the methodology used to calculate the valuation of equities including preferred and common stock. Paying particular interest to the formulas used, what do you consider to be the most important factor in determining the valuation of a bond.

In your answers in each category, explain both the reason you believe this is the more important factor and how that factor varies with different market conditions.