Final answer:
Issuing bonds instead of issuing additional common stock can be more advantageous for a firm in obtaining long-term funds. It allows the firm to maintain control and ownership, while still accessing the necessary capital.
Step-by-step explanation:
When obtaining long-term funds, issuing bonds rather than issuing additional common stock can be more advantageous for a firm. This is because borrowing money through bonds allows the firm to maintain control of its operations and not be subject to shareholders. By issuing bonds, the firm commits to scheduled interest payments, but it can have more flexibility in managing its capital structure and financial obligations.
Furthermore, issuing bonds can be a preferred option for firms because it does not involve selling off ownership to the public or becoming responsible to a board of directors and shareholders, as is the case with issuing common stock.
Overall, issuing bonds provides the firm with a way to access long-term funds without compromising control and ownership. It allows the firm to raise capital for investments or other financial needs while maintaining operational autonomy.