Discuss the three main advantages of bond financing (Give two examples of each advantage).

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Discuss the three main advantages of bond financing (Give two examples of each advantage).

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Answer: We could highlight advantages of bond financing  as follow

  • One of the major advantage of issuing bond is that, interest on bonds is deductible on Company’s income tax return

 

  • The another advantage of bond financing instead of stock is that company’s ownership interest in the corporation does not go to the outsiders so we could say that, ownership of the organization could not be diluted by outsider owners.

 

  • The whole gain in the value of assets will do to stockholders

 

  • Here company gets to control over the assets of the company and use outsider’s money without ownership. If the  such asset ending up in very profitable, then all earnings less the interest, can strengthen the owners’ financial position.

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