Final answer:
As an analyst, one should review the company's annual report and 10K filings with the SEC for detailed notes payable information. The money listed as assets in a bank's balance sheet may not be present due to fractional reserve banking. Assessing loans in the secondary market depends on the borrower's payment history and changes in the economy's interest rates.
Step-by-step explanation:
When trying to understand the nature of notes payable for a particular company, as a full-time analyst at an investment bank, one would typically look into the company's annual report and its 10K filing with the SEC (Securities and Exchange Commission). This documentation provides in-depth information about the company's financial obligations, terms of the debt, and other pertinent details that would not be mentioned in a broad accounting course. For an accurate investment analysis and understanding of a firm's financial position, thorough research and review of these financial statements are imperative.
Regarding the conceptual question on bank balance sheets, the 'money' listed under assets is often not present within the bank because of the fractional reserve banking system, where banks are required to keep only a fraction of deposits on hand, lending the rest out. If buying loans in the secondary market, one might pay more for a loan if the borrower has recently declared high profits (indicating lower risk), or less if the borrower has missed payments (indicating higher risk) or if interest rates have risen (making the fixed-rate loan less valuable).
Bank borrowing is generally more suitable for smaller firms due to the more customized and intimate monitoring the banks can establish by observing the firm's transactions. On the other hand, larger, well-known firms tend to issue bonds to raise capital for a variety of purposes such as financing new investments, paying off old debts, or acquiring other companies. This illustrates the diverse strategies companies may employ based on their size and financial needs.