Chapter 13 Corporate financing decisions and ECM S What should we do for determine the best financing strategy Should the firm reinvest most of its earnings in the business, or should it pay them out as dividends? If the firm needs more capital, should it issue more stock or should it borrow? Should it borrow short-term or long-term Should it borrow by issuing a normal longterm bond or a convertible bond?Chapter 13 Corporate— financing decisions and ECM • What should we do for determine the best financing strategy? – Should the firm reinvest most of its earnings in the business, or should it pay them out as dividends? – If the firm needs more capital, should it issue more stock or should it borrow? – Should it borrow short—term or long—term ? – Should it borrow by issuing a normal long—term bond or a convertible bond? ……………