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Let's discuss bonds! Why do companies issue bonds when they can issue stock? What...

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Accounting

Let's discuss bonds!

  1. Why do companies issue bonds when they can issue stock? What are the advantages in issuing bonds? Aren't there any drawbacks of issuing bonds?
  2. Can anybody explain how the market price of a bond is determined? Is the current price of a bond solely the function of the amount of the principal payments at the end of the bond's maturity? Why or why not?
  3. Will the total amount of interest expense reported over the life of the bonds be the same regardless of whether the bonds are issued at par, premium, or discount? Can you explain? Will the total amount of interest paid over the life of the bonds be the same regardless of whether the bonds are issued at par, premium, or discount?

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