Lecture #19 [UGBA102]

University of California, Berkeley **We aren't endorsed by this school
UGBA 102
Oct 28, 2023
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Topic 9 Part 1 Reporting and Interpreting Bonds Spring 2022 Professor Xi Wu Annotated
Capital Structure The mixture of debt and equity used to finance a company ' s operations is called the capital structure : Debt - funds from creditors Equity - funds from owners investors lenders
Bonds Advantages of bonds: Stockholders maintain control because bonds are debt, not equity. Interest expense is tax deductible. Disadvantages of bonds: Risk of bankruptcy exists because the interest and debt must be paid back as scheduled or creditors will force legal action. Negative impact on cash flows exists because interest and principal must be repaid in the future. Bonds are securities that corporations and governmental units issue when they borrow large amounts of money . can be fairly stable Io r Bond Rates
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