What are three reasons why companies purchase investments in debt or stock securities? | Homework.Study.com (2024)

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• Explain why corporations invest in stocks and debt securities.
• Explain why corporations invest in stock and debt securities.
• What are the reasons that corporations invest in securities?
• Give four reasons why a company might purchase treasury stock.
• Discuss the reasons why corporations invest in securities.
• For what reasons might a corporation purchase its own stock?
• Why might a company invest in the securities of another company?
• Indicate three reasons why a company might sell its receivables to another company.
• What are the reasons you might want to consider investing in preferred stock rather than bonds?
• Why do companies purchase securities of other corporations?
• What are Treasury stocks and why do companies engage in their purchase?
• Discuss the various reasons why one corporation might invest in the stock of another corporation.
• Why would a company invest in securities that provide no current cash flows?
• Briefly list four common reasons why a corporation might back its own stock.
• Why do companies make investments in other companies? What are the differences between debt and equity investments? What would influence a company to choose equity or debt as an investment?
• Why would a company buy back its own stock? Explain.
• Give Several reasons why a company would be willing to pay more than book value for subsidiary stock acquired.
• Why do individuals or entities choose to invest in the capital stock of corporations?
• Explain why corporations issue stocks.
• What are some of the reasons a company issues stock dividends? Explain.
• Why is it advisable for a company to issue bonds instead of stock?
• Why do companies issue bonds when they can issue stock? What are the advantages in issuing bonds?
• What is the key reason behind bonds payable being less expensive than common stock?
• 1) Why are most large companies established as corporations rather than as partnerships? 2) Why is treasury stock not considered and investment or an asset? 3) Why do many companies like to give stock options as compensation?
• Why do companies make investments in other companies?
• Why do companies invest in other companies?
• Why might a business invest in another company's stock?
• Why would a company issue bonds when it could just sell more stock to raise money?
• Explain why firms need to use both debt and equity instruments.
• What is the typical stock investment when investing cash for strategic reasons?
• Why does mature company tend to buy back their stock?
• Why would a corporation issue bonds payable instead of issuing stocks?
• Give three reasons why a corporation may distribute a stock dividend.
• Why does a company need to carefully consider any capital investments?
• What are some of the reasons that a company disposes or exchanges its assets?
• What are stocks and why do people buy them?
• What is the advantage of purchasing a corporate bond instead of stock?
• Explain why investors would pay more than maturity value for a bond.
• Why would a company consider issuing preferred stock? If it needs to raise capital, wouldn't it be better just to borrow the money from a bank?
• For what reasons might a company like IBM repurchase some of its stock (treasury stock)?
• Why do companies give dividends?
• Explain why corporations may issue more than one type of stock.
• What are some potentially legitimate reasons for a company to have a high inventory balance?
• Why are corporate treasurers the main buyers of preferred stock?
• Mention one reason why bonds are rarely sold at their maturity value.
• What is Treasury stock and why does a company engage in Treasury stock transactions?
• Why don't we just credit revenue instead of paid in capital when issuing stock?
• Why do firms hold some of their assets in the form of cash?
• Explain how debt and stock investments are reported in financial statements.
• What is one potential advantage of financing corporations through the use of bonds rather than common stocks?
• What are the advantages to issuing bonds over stocks?
• Why do companies provide income statements to their stockholders?
• List at least three ways that bonds may be taken off the market prior to maturity.
• Why do companies issue bonds?
• Which of the following statements describe the principal reasons why stockholders and credit analysts use finical statement analysis? 1) To assess the risks associated with payments on debt and return on investment. 2) To predict the amount of expected re
• Mention a couple of reasons why an organization will prefer issuing stock dividends over cash dividends.
• Why is it riskier to buy stocks on margin?
• Discuss several reasons why a parent company would be willing to pay more than book value for subsidiary stock acquired.
• Provide the reasons and discuss why a company may want to reacquire or retire its shares.
• Why might stock returns have greater risk than is justified by the fundamentals of the firm's business activities?
• Why is a trading investment always a current asset?
• Why do secondary market transactions for securities not affect corporate finance?
• For what reason do corporations retain earnings in the business?
• Explain what is Treasury Stock and its purpose.
• Explain why do companies provide balance sheets to their stockholders.
• Describe how debt and stock investments are reported in financial statements.
• What are the advantages and disadvantages of investing in preferred stock?
• Should an investor expect a mutual fund to outperform the market? If not, why should the investor buy the shares?
• Why is common stock not considered an asset? Isn't the company gaining value from it?
• Why might a business invest cash in temporary investments?
• What is callable preferred stock and why do corporations issue such stock?
• What are some reasons that companies dispose of assets?
• Why does most funding go through loan finance than stock finance?
• Why would companies perform a set-off of asset and liability?
• Explain, how can companies control the value of their stock?
• Identify at least two reasons that a company might prefer to issue debt rather than equity for tax purposes. Determine how the holders of the instruments view the advantages and disadvantages of holdi
• Why might a company lease a long-term asset rather than buy it and issue long-term bonds?
• Why would a company pay out dividends, when they could be reinvesting, and are there alternatives to paying out cash?
• What are the possible reasons for a corporation to declare a stock dividend?
• What business reasons do you think there might be for giving the interest on debt a tax break (something homeowners get too) when we don't have one for firms paying dividends?
• Explain why some firms have high price-earnings ratios.
• Explain why high-income and wealthy people are more likely to buy a municipal bond than a corporate bond.
• Why are inventories values at the lower of cost or market? Explain.
• Explain why bonds retired before maturity may result in a gain or loss to the issuing company.
• Review the reasons why firms undertake leasing. Explain why some of these reasons are not beneficial for shareholders.
• How can debt increase the value of a company? Why not use 100% debt financing if debt increases value? Justify your answer.
• Why does a company need to record bad debt expense?
• Describe the income statement. Why is this statement important to the company, creditors, and investors?
• Discuss the options for a company to raise funds. Identify at least two (2) reasons that a company might prefer to issue debt rather than equity for tax purposes. Determine how the holders of the ins
• Why are money market mutual funds among the safest investments available to savers?
• What are some factors to be considered in making capital investment decisions?
• What is the importance of financial statement analysis, and determine why it is important to investors and creditors? Imagine you are considering investing in a corporation. Suggest what key informati
• What are the advantages of financing through the sale of stock?
• Why are inventories written down to the lower of cost or market?
• Describe the income statement. Why is this statement important to the company, creditors, and investors? Explain.
• Which statements describe the principal reason(s) why investors and creditors use financial statement analysis? 1. To assess the risks associated with expected returns. 2. To establish recommended dividend and interest payments. 3. To evaluate top and
• Explain some of the methods that investors can use to be able to determine if a corporation would be worth investing in. Explain why those methods would be used over others.
• For what reasons might a company purchase its own stock? Is the accounting different when a company purchases its own stock; if so, how? How does it affect the stockholders' equity section?
• Why would you use bond issuance (bond offering) versus stock issuance from a corporate perspective in terms of capital need? What are some of pros and cons of debt financing versus equity financing, w
• What is Treasury Stock and why would a company have it in the Equity section?