When a firm needs a large amount of capital for an extended period of time, what type of financing, even with stiff annual or semi-annual interest payments, might be best?
A) Retained earnings
B) Corporate bonds
C) Common stock
D) Stock split
E) IPO
Answer: B
Explanation: B) Bonds are attractive when firms need large amounts for long periods of time. The issuing company gains access to large numbers of lenders through nationwide bond markets.
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