Final answer:
A bond, like a bank loan, is a way for firms to raise capital through debt. Differences include the tradeability of bonds and the more restrictive nature of bank loan covenants. When Eva makes a 10% down payment on a $200,000 house, her equity is $20,000.
Step-by-step explanation:
From a firm's perspective, a bond is similar to a bank loan in that both are forms of debt financing used to raise capital. However, they have distinct differences. Bonds are typically traded in public markets, providing liquidity and the potential for pricing efficiency. Also, bondholders generally have less control over the firm than lenders from a bank loan, who may impose certain covenants or restrictions.
In the scenario provided, when Eva buys a house for $200,000 and makes a 10% down payment, we calculate her equity as follows: Equity = Down Payment / Purchase Price = $200,000 * 10% = $20,000. This represents Eva's initial stake in the property.