Bolster Inc. has decided to expand its operations to owning and operating car washes. The following is an excerpt from the conversation between the chief executive officer, Mike O'Brian, and the vice president of finance, John Ibison: Mike: John, have you given any thought to how we're going to manage the acquisition of Swiffer Car Wash? John: Well, the two basic options, as I see it, are to issue either preferred stock or bonds. The equity market is a little depressed right now. The rumor is that the Federal Reserve Bank's going to increase the interest rates either this month or next. Mike: Yes. I've heard the rumor. The problem is that we can't wait around to see what's going to happen. We'll have to move on this next week if we want any chance to complete the acquisition of Swiffer Car Wash. John: Well, the bond market is strong right now. Maybe we should issue debt this time around. Mike: That's what I would have guessed as well. Swiffer Car Wash's financial statements look pretty good, except for the volatility of it's income and cash flows. But that's characteristic of the industry. Discuss the advantages and disadvantages of issuing preferred stock versus bonds. Remember the company is issuing the bonds, be sure to discuss this from the Company's point of view not the investor's point of view a. You must have a source within your reply. You may use the book as your reference, but DO NOT copy information word-for-word. You also have the option to use another source . b. There must be at least two advantages and two disadvantages listed with supporting information. (from company's point of view, who is issuing the bonds or stock not investors) c. Your comments should at least be a paragraph and well thought out.
Functions of the Federal Reserve System
The Federal Reserve System looks after the financial activities and operations of the banking system. It is the apex body that has complete control over the banking regulations. All the guidelines regarding the banking system, money supply, and formulation of the monetary policy come under the purview of the Federal Reserve System. The New York Fed also helps in drafting the monetary policy and supervising the financial system.
Elastic and Inelastic Markets
Measuring the change in percentage of an economic variable with respect to change in a different economic variable is known as elasticity. This change in percentage results in a change in price concerning changes in other factors. In simple terms, when one factor brings a change to another factor, it is called elasticity.
Bolster Inc. has decided to expand its operations to owning and operating car washes. The following is an excerpt from the conversation between the chief executive officer, Mike O'Brian, and the vice president of finance, John Ibison:
Mike: John, have you given any thought to how we're going to manage the acquisition of Swiffer Car Wash?
John: Well, the two basic options, as I see it, are to issue either preferred stock or bonds. The equity market is a little depressed right now. The rumor is that the Federal Reserve Bank's going to increase the interest rates either this month or next.
Mike: Yes. I've heard the rumor. The problem is that we can't wait around to see what's going to happen. We'll have to move on this next week if we want any chance to complete the acquisition of Swiffer Car Wash.
John: Well, the bond market is strong right now. Maybe we should issue debt this time around.
Mike: That's what I would have guessed as well. Swiffer Car Wash's financial statements look pretty good, except for the volatility of it's income and cash flows. But that's characteristic of the industry.
Discuss the advantages and disadvantages of issuing preferred stock versus bonds. Remember the company is issuing the bonds, be sure to discuss this from the Company's point of view not the investor's point of view
a. You must have a source within your reply. You may use the book as your reference, but DO NOT copy information word-for-word. You also have the option to use another source
. b. There must be at least two advantages and two disadvantages listed with supporting information. (from company's point of view, who is issuing the bonds or stock not investors)
c. Your comments should at least be a paragraph and well thought out.
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