Suppose TouchTech, a hand-held computing firm, is selling bonds to raise money for a new lab-a practice known asequity finance. Buying a bond issued by TouchTech would give Andrewa claim to partial ownership in the firm. In the event that TouchTech runs into financial difficulty, the stockholders

Question

Lewis Snow

Computers & Technology

9 September, 21:27

Suppose TouchTech, a hand-held computing firm, is selling bonds to raise money for a new lab-a practice known asequity finance. Buying a bond issued by TouchTech would give Andrewa claim to partial ownership in the firm. In the event that TouchTech runs into financial difficulty, the stockholders

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Answers (1)

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Tessa Brock · Answer 1

Answer: the stakeholders will not get paid (there is no obligation to repay the money acquired through equity finance by the company)

Explanation:

there is no obligation to repay the money acquired through equity finance by the company. Therefore when they run on a loss they both suffer the loss and the company does not have to pay back the stakeholders.