Final answer:
From the issuer standpoint, the disadvantage of bonds is the obligation to make regular interest payments to bondholders, which can strain cash flow and limit flexibility. Rising interest rates can also make the fixed interest rate on the bond less attractive.
Step-by-step explanation:
From the issuer standpoint, the disadvantage of bonds is the obligation to make regular interest payments to bondholders. Regardless of the profitability or financial health of the issuer, they must make these predetermined payments. This can put a strain on the issuer's cash flow and limit their flexibility in allocating funds for other purposes.
Additionally, if interest rates in the market increase after the bond is issued, the fixed interest rate on the bond may become less attractive compared to other investment options. This could result in investors selling the bonds in the secondary market at a discount, potentially leading to loss of reputation and increased borrowing costs for the issuer.