Final answer:
Financing through bonds and financing through bank loans have similarities and differences. Bank loans are more common for small firms, while large firms often issue bonds to raise capital.
Step-by-step explanation:
Financing through bonds and financing through bank loans have similarities and differences.
Both methods involve borrowing money and require payment of interest. The main difference is that bank loans require persuading a bank to lend money, while issuing bonds requires persuading multiple bondholders.
Bank loans are often more common for small firms because banks can have a better understanding of the firm's financials. On the other hand, large and well-known firms tend to issue bonds to raise capital.