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Business Financing and Capital Structure Clifton Williams Strayer University Professor Henderson Fin 100 May 24, 2014

Business have to make many financial decision that a direct impact on operations and the ability to successfully compete in the marketplace. I will assume that I am a financial advisor to a business. I will give advice that I would give to the client for raising business capital using both debt and equity options in today’s economy. I will give advantages and disadvantages of each option. I will summarize the advice that I will give the client on selecting an investment banker to assist the business in raising capital. I will discuss the historical relationships between risk and return for common stock versus corporate bonds. I will explain the manner in which diversification helps in risk reduction in portfolio. I will support my response with actual data and concept learn from class.
As financial advisor to a business I will give my client advice on raising business capital using debt and equity capital with their advantages and disadvantages. As my clients advisor I would describe the two most common types of financing which are debt and equity capital. I would tell them the difference between the two and the advantage and disadvantage of the two. Debt capital is an agreement contract between lenders and companies trying to start or grow its organizations. All debt issued have a maturity date when the firms are to pay the bond principal (par-value or face value) to the bond holders. Business can borrow from banks, one popular source of debt financing is commercial finance companies. A debt holder can force a firm into bankruptcy if the firm have not met the terms of the contract. A periodic interest payment is due to the holder of debt securities

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