Final answer:
An investment bank facilitates a company's bond issuance to raise capital, as opposed to customized bank loans which are often used by smaller firms. Larger firms prefer bonds for significant capital needs, leveraging the investment bank's capability to market to a broad investor base.
Step-by-step explanation:
The relationship between an investment bank and a company in regards to bonds is that the investment bank acts as an intermediary to help the company raise financial capital by issuing bonds. Instead of a bank loan, which is typically more customized and suitable for smaller businesses due to the bank's familiarity with the firm's finances, larger and well-known firms may opt to issue bonds to a broader market of investors to acquire capital for investments, pay off existing bonds, or finance acquisitions.
This process of issuing bonds, known as underwriting, requires the investment bank to market and sell the bonds to multiple investors, which could be contrasted with the more direct lender-borrower relationship seen in bank loans.