Often in the markets when the price of stock goes up – the price of bonds goes down and vice versa
Companies have various different ways to finance their business. We know that we can obtain money through debt financing through the sale of bonds. We know we can obtain financing by selling equity in the company through the sale of stock. This is an article from the Wall Street Journal on how Tesla did both at the same time. Read the article and respond to the following questions. Do not forget to respond to at least two other classmates.
Questions:
1. Often in the markets when the price of stock goes up – the price of bonds goes down and vice versa. Based upon teh article and what you have learned in class, why do you think this was a good strategy?
2. Tesla has been on the brink of bankruptcy and is now at the height of prosperity. Through this time Tesla/Elon Musk have had a group of ardent followers and detractors. Why do you think there are people who are loyal/defenders of Musk and Tesla? Why have there been detractors/short sellers of Musk and Tesla?
Answer preview Often in the markets when the price of stock goes up – the price of bonds goes down and vice versa
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