Question

A company that is unwilling to give up control of the business is in need of...

A company that is unwilling to give up control of the business is in need of additional capital.  Would issuing additional stock or issuing bonds be better for the company?

Homework Answers

Answer #1

Issuing Bond will be better for the Compny .

When we issue Stock in that case our onwership right get divided so as control of the company also get divided .For example If Company has 5 shareholders each attain 20% shares ,this also means that 20% control every shareholder holds.If they add 1 more Shareholder for the captial with same amount they have invested then Share in Company Will be 16.67% and so as there Control.

Where as, If we issue then there will no change in onwership and the Control will remain the same as they were before the issue of Additional Captial Because Bond Comes in Debt which does not affects the Control Over the Company.

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