Question

Suppose NanoSpeck, a biotechnology firm, is selling bonds to raise money for a new lab—a practice known as __________(equity or debt?).

Buying a bond issued by NanoSpeck would give Clancy___________(a claim to partial ownership in, or an IOU promise to pay?)in the firm.

In the event that NanoSpeck runs into financial difficulty, __________(clancy and the other bondholders, or the stockholers) will be paid first.

Answer 1

The correct answers are:

- Debt.

- An IOU promise to pay.

- The stockholders.

Step-by-step explanation:

To begin with, in the field of finance the bond is an instrument of indebtedness of the bond issuer to the holders. Moreover, this instrument is also known as a debt security under which the party that generated the bond owes a debt to the holder of the bond and must pay ir under certain circumstances stipulated at the time of the purchase, therefore that it is known that the bond is a form of ''I owe you'' or IOU promise to pay. Furthermore, the bondholders are only lenders and therefore they do not owe a part of the company, so that means that if the company runs into financial difficulty then the stockholder, who do owe a part of the company, will be paid first.