Question

Short- answer

1/ Why would firms sell stock instead of bond? What are some benefits from a buyer perspective of stock ownership?

2/ What are some adverse effects of issuing more stocks when firms need to borrow more money?

Answer 1

Answer 1-Firms sell stock instead of bond are:-

1.Firms sell stock instead of bond because it conserve the cash.

2.It is helpful in paying down debt,as stocks helps a company in paying down it's high debt load.

3.It is used to raise money as investment is used in multiple ways.

Benefits from a buyer perspective of stock ownership are:-

1.The opportunity to raise money.

2.It is easy to buy as the stock market makes the buying of shares easy.

Answer 2-Adverse effects of issuing more stocks is the number of investors will be more,which will be taking up company's profits also.The company's owners are the ones who suffer more as their start losing much of the profit.

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