Suppose you are the financial advisor of a company. Describe the advice you would give the client for raising business capital using both debt and equity options in today's economy. Describe the main advantages and disadvantages of each option. There are pros and cons when seeking to raise capital using both debt and equity financing options. Debt financing is useful in helping you grow your business by being able to pay for equipment and other assets before you profit from your business. One of the key strategies of debt financing is that it allows you to implement an aggressive business growth strategy, but depending on the interest rates of the loan, this can also be negative. The money must be repaid over a certain period along with a set monthly payment, regardless of how profitable the business is. Going this route allows the owner to not give up ownership or control of the business. The disadvantage of debt financing is that the loan must be repaid plus interest, it is also borrowing against unrealized profits and overuse of debt, and financing can limit cash flow futures and suppress future growth. Equity financing means that the founder of the company will invest their capital. owning money in the business or relying on family and friends to invest in the business in exchange for partial ownership of the business, which also includes the opportunity to share in the profits. One of the main advantages of equity financing is that there is no need to repay, but you share the responsibilities and risks of the business. Since you don't have debt payments, you'll likely have plenty of cash flow that can be used to grow the business. By keeping your debt-to-income ratio low, you can apply for a loan when needed. One of the bi...... middle of paper ...... lders. If a person diversifies by selecting less risky bonds and balancing their portfolio with more aggressive stocks, they won't lose as much money during a volatile market downturn. When investing in stocks and bonds for the long term, it makes sense to balance an aggressive portfolio of investments. Works cited by the Investor Guide team (January 25, 2013). Benefits and risks associated with bonds. Retrieved from Investor's Guide: http://www.investorguide.com/article/11682/benefits-and-risks-associated-with-bonds-igu/Kokemuller, N. (nd). The pros and cons of debt and equity financing. Retrieved from the Houston Chronicle: http://smallbusiness.chron.com/advantages-disadvantages-debt-equity-financing-55504.htmlMelicher, RW and Norton, EA (2011). Introduction to Finance (14th ed.). Hoboken, New Jersey: John Wiley & Sons.