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unvrs
unvrs, Master's Degree
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Why do companies issue bonds? Would you rather buy a bond at

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Why do companies issue bonds? Would you rather buy a bond at a discount or a premium rate? Explain why. What is the determining factor of whether a bond is sold at a discount, face, or premium?
Submitted: 4 years ago.
Category: Business and Finance Homework
Expert:  unvrs replied 4 years ago.

unvrs :

Companies issue bonds to finance their operations. Often, companies need to raise money to support ongoing or future projects. So they sells bonds to bondholders as debts and repay them with coupons and principal payments in the future.

I would buy a bond at a discount because the profit is the difference between the discount price and the par value, plus coupons. Some determining factors of whehter a bond is sold at a discount, face, or premium are company credit rating, duration and economic risks.

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