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You are the CFO of a company that is considering issuing its first bond issue to the public. You have been asked to present a

You are the CFO of a company that is considering issuing its first bond issue to the public.

You have been asked to present a few matters related to debt (bond) financing to the board of directors.

Please briefly explain to the board: (1) the usual collateral position of bondholders (lenders) versus equity investors, (2) why common stockholders can demand a higher rate of return than lenders, and (3) why you would suggest debt (or equity) financing.

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