How do you reply to a discussion post below from a classmate? Please provide ans

Question

How do you reply to a discussion post below from a classmate? Please provide answer or additional comments to the discussion. Thank you in advance!

This is a good summary of the content. The bond having a face value with a limited return probably stems from the fact that the company is essentially asking for money, with a promise to return that investment to the lender (Ross, Westerfield, & Jordan, 2013). The low return is set by the borrower when they agree on the rate of return and are attempting to get money as cheaply as possible (Ross, Westerfield, & Jordan, 2013). I think of it as the same concept as getting a home loan or car loan. We try to find the lowest interest rate to avoid paying a significant amount to borrow money. I do like that the organization has to have some sort of security set up or when filing for bankruptcy the organization must have a plan to repay bonds as part of the deal (Ross, Westerfield, & Jordan, 2013).

Reference

Ross, S. A., Westerfield, R. W., & Jordan, B. D. (2013). Fundamentals of Corporate Finance (10th ed.). Irwin: McGraw-Hill

Explanation / Answer

The Company can go for issuing the bonds to raise the funds.but it has to make sure that the company should provide security to investors in case of any bankruptcy airse.

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