Merits of raising capital through the issuance of Bonds or through issuance of Stocks - Essay ExampleMerits of raising capital through the issuance of Bonds or through issuance of StocksMarvin Appel emphasized that “corporate bonds are debt instruments issued by organizations. And, unlike government which is very least likely to default, there is always risk that a corporate business may not be able to pay its obligations to the bondholders†(10). Matt Evans discussed few advantages of issuing bonds to raise capital for a company’s operations. Some of these advantages are: 1. Interest payments made to bond holders are tax deductible as reflected on the issuing corporation’s income statement; 2. Bond issuances do not dilute earnings per share or decrease control within the company; 3. Usually, cost of bonds issued is fixed; interest and principal do not change within the life of the bond; and 4. Expected return of investment to investors is usually lower than ROI on stocks.
