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Discussion
Why do companies issue shares? In order to raise capital, generally to expand the business
Suggestion • Raising capital • Expanding the business

Discussion
Why do people buy the shares? Shares give their holders part of the ownership of a company. (Shareholders have a part of the ownership.) Shareholders receive a proportion of a company’s profits as dividend, and may be able to make a capital gain by selling their shares at a higher price than they paid for them. (Shareholders receive dividend and may be able to make a capital gain by selling their shares at higher price than they paid for them.)
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Discussion
Why do most companies use a mixture of debt and equity financing?

Discussion
Why do most companies use a mixture of debt and equity financing? The advantage of borrowing money by issuing bonds is that interest payments, unlike dividends, are tax-deductible. But interest has to be paid even in a year in which a company makes no profit, so it is safer to have equity capital as well, on which no dividends need be paid if there are no profits.
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Stocks and Bonds Which security is better?

• What are differences between bonds and shares?

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STRUCTURE
BONDS - a form of debt with which you are the lender instead of the borrower. - contractual loans made between investors and institutions that, in return for financing, will pay a premium for borrowing, known as a coupon. - the bond's face value is returned to the investor at maturity. - The guarantee of payback and all coupon payments relies solely on the ability of the borrower to generate enough cash flow to repay bondholders.
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STRUCTURE
SHARES - a form of ownership - investors are given no promises about returns of the initial investment. - the profitability of