International Finance Question Coursework Example | Topics and Well Written Essays - 250 words

International Finance Question - Coursework Example When compared to a bank loan a bond tends to give the investor better terms, in loans the bank set the interest rates where else when a company issues a bond, the company controls the interest rates (Levi, 2009). Foreign bonds are also a good method of funding expansion to other countries because they protect the firm from currency fluctuation in the country of interest. The greatest disadvantage of bonds, however, is that it will reduce the firm’s trading flexibility. This is because the firm cannot trade out of a bond that is doing well while it maintains its other holdings (Levi, 2009). The second option that a firm can explore is getting money from private investors. They provide a flexible source of capital compared to what is provided by banks and other financial institutions. Loans from private sectors are often available at low costs (Levi, 2009). Acquiring funds from private investors is a simple process when compared to banks. A firm will save a considerable amount of time and money when acquiring the loan. The disadvantage associated with this option is that private investors might ask for an ownership stake in the company, and this is not usually acceptable with many firms. The second disadvantage is that the investor may require time to consider the request; this time may not be available to the firm if the situation is of urgency (Levi,