First Part 400 words. Understanding the differences between the stock market and the bond market is essential to managing corporations and investing. In your discussion, answer the following questions:
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- Describe the products and the functionality of the stock market.
- Describe the products and the functionality of the bond market.
- Describe how an individual company can use the stock market to generate initial funding as well as subsequent funding.
- Describe how an individual company can use the bond market to generate funding.
- Describe which is more expensive for a company to generate funds—the stock market or the bond market.
Second Part 800 words
Understanding how to properly value a vanilla bond (a plain bond) is essential for finance. Using the following Web site, find 3 different funding structures. Describe for each structure: security type, term, and yield. Furthermore, take a look at each of their offering documents, and provide a short description of the information found in the documentation.
- Why do the different types of bonds get different rates? Explain your answer.
- What makes each of the different structures different? Explain your answer.
- What does the rate given say about the credit rating for each issuer? Explain your answer.
- How does credit rating affect the rate given to the issuer? Explain your answer.
- Which structure has the best credit rating based on the yield given to each structure? Explain your answer.
- What is the credit rating supposed to tell you? Explain your answer.
- Which bond is receiving the best price? Explain your answer.
- Why does having a good credit rating matter to the issuer? Explain your answer.