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Bonds: description and illustration

Every organization needs money in order to be able to finance their projects. In business companies there are two main sources of finance available, equity and debt. It is in the best interest of financial managers to select finance mediums that maximize shareholders wealth and improve the value of the firm. In the assignment our scope is to describe the latter finance mediums and outline its distinguishing characteristics. 1. 1 Corporate bonds The choice of long-term financing for a corporation mainly rests between equity and debt financing. Corporate bonds form part of debt financing and are usually attained by firms in order to financing capital projects of a long-term nature. Several theorists contend that bonds are beneficial to the value…