Week 4 topic response | Business & Finance homework help
A company can issue a bond by issuing new securities to investors in return for cash. The company promises to pay interest and repay the principal amount of the security at maturity. The type of bond that is best to issue depends on the needs of the company as well as market conditions. Generally, short-term bonds are better for companies with high cash flow needs, while long-term bonds may be more suitable for companies with steady growth prospects and lower borrowing costs. Companies should also consider whether they want a fixed or variable rate bond, depending on their risk appetite and expected returns. In addition, convertible bonds may be beneficial if there is an expectation of future stock appreciation. Ultimately, the type of bond chosen will depend on what best meets the company’s financial goals and needs.