Question

 

Question: Why would a company choose to issue bonds instead of issuing stock?

Answer 1

 

Step 1: Definition of bonds

The bonds are long-term debt that the company raises by issuing bonds to filfill the need for a large amount of money.

Step 2: Issue bonds instead of issuing stock

There are two reasons for a company choose to issue bonds instead of issuing stock:

1.      Bonds are less expensive than common stock.

In the common stock, a company has to share ownership, but in the bonds, the company does not share the company ownership

 

The common stock is a type of stock in which the company transfers some part of ownership to the stockholder.