Corporations raise capital by selling debt which are bonds and notes, and equity which is stock claims against themselves - either directly to investors or indirectly to financial intermediaries, such as commercial banks. ... Longer term debt instruments include notes (debt with original maturities of less than seven years) and various types of corporate bonds (debt with original maturities of more than seven years). ... This is a classic example of a collective action problem that is pervasive in most relationships between stockholders and managers. ...

• Word Count: 1383
• Approx Pages: 6
• Grade Level: Graduate