Why would the U.S. government, local governments, and corporations issue bonds? As owners, what rights and...

Why would the U.S. government, local governments, and corporations issue bonds?

As owners, what rights and advantages do shareholders obtain?

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Expert Solution

US government issue bonds to finance its budget and manage fiscal deficit of the US government. It can be used to finance infrastructure projects and manage money supply in the economy.It can be used to reduce inflation too.

Local government issue funds to manage their local budgets. They issue to spend on infrastructure, public utilities, roads ,etc.

Corporations issue bonds to get cheap source of capital to fund their project. Issuing bonds to certain extent reduces the cost of capital which increases the value of bond.

Rights and advantages of shareholders
1. Right to receive share in profits and dividends paid out by the corporation
2. They have the right to receive additional shares issued by corporation in rights issue.
3.They can participate in voting in important decisions of company and in electing board of directors.
4. They have limited liability and lose amount to the extent they have invested and not more

jeff jeffy answered 8 months ago

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