Assignment 2 Business Financing and the Capital Structure

1 Assume that you are financial advisor to a business. Describe the advice that you would give to the client for raising business capital using both debt and equity options in today’s economy. Outline the major advantages and disadvantages of each option.

2.Summarize the advice that you would give the client on selecting an investment banker to assist the business in raising this capital.

3.Explain the historical relationships between risk and return for common stocks versus corporate bonds. Explain the manner in which diversification helps in risk reduction in a portfolio. Support response with actual data and concepts learned in this course.