How does issuing bonds benefit a company financially?

Issuing bonds provides funds without giving up ownership, which is why this choice is accurate. When a company issues bonds, it is essentially borrowing money from investors with the promise to pay them back with interest at a later date. This method of financing allows the company to raise significant capital for projects, expansion, or operational needs while maintaining control and ownership of the business.

Unlike equity financing, where investors receive ownership shares and may influence company decisions, bondholders are creditors. This means the company does not dilute its ownership or decision-making power. Additionally, interest payments on bonds are often tax-deductible, which can reduce the company’s overall tax burden and make debt financing an attractive option.

In contrast, the other options do not accurately describe the financial implications of issuing bonds. Decreasing operational expenses is not a direct outcome of issuing bonds; rather, it relates to efficient management. Immediate profit generation is also not guaranteed because funds raised do not directly result in immediate profits. Lastly, issuing bonds does not guarantee higher stock prices, as stock prices are influenced by many factors, including overall market conditions and company performance.