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Essay heading: Debt vs Equity Instruments
 
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Issue: Business
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Date added: July 16, 2007
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No of pages / words: 8 / 2006
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Holders of common stock have a great opportunity to share the entity's profitability because of unlimited potential for dividends. Likewise, common stock holders also bear the greatest risk of loss because they are subordinate to all other creditors and preferred stockholders. The advantages of equity are that there is no obligation to pay back the amount invested...
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The advantages of equity are that there is no obligation to pay back the amount invested. Businesses will have more cash available because of no debt payments. Another advantage of equity is that business assets do not have to be pledged as collateral to get equity investments. The biggest disadvantages of equity are that profits go to other equity investors and taxes are non deductible...
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