Chapter 14, Problem 14.5CP

To determine

Bonds: Bonds are long-term promissory notes that are represented by a company while borrowing money from investors to raise fund for financing the operations.

Preferred stock: The stock that provides a fixed amount of return (dividend) to its stockholder before paying dividends to common stockholders is referred as preferred stock.

To discuss: the advantages and disadvantages of issuing preferred stock versus bonds.