Chapter 20, Problem 13CQ

Summary Introduction

To explain: The recommendation for the method of issue and the reason for it.

Bond:

Bond refers to the securities which are traded in the public to raise the capital when needed. It is an investment with a fixed income where an investor gives money to an entity or individual for a specified period of time at a fixed rate.

Underpricing:

The underpricing term refers to the offering of the stocks or the bond at a low price than before. The stocks or the debt are said to be underpriced when they are traded at a lower

Raising capital:

Any company requires some funds to run the business, to purchase the fixed assets, and paying the specific liabilities. The company also needs funds to meet out the expenses. To meet all these needs of fund, the company has to raise the capital.