What are foreseeable advantages of issuing debt or equity

Reference no: EM132177017

Question: 1. Banco Compartarnos's success in soliciting public funds through its 2007 public offering was an important event in the commercialization and evolving nature of microfi nance. What are some foreseeable advantages of issuing debt or equity? What are some of the trade-offs associated with these changes?

2. In previous chapters we show that in theory, interest rates charged by lenders are limited by borrowers' incentive compatibility constraints, in the sense that excessively high interest rates would undermine borrowers' incentives to repay their debt obligations. Provide a reasonable explanation for the fact that even though Banco Compartamos charges high rates of interest, it achieves high repayment rates. Use a dynamic framework for your analysis.

Reference no: EM132177017

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