Four ways a corporation can raise capital are through bonds, common stock, preferred stock, and convertibles. Describe each method.

Bonds are debt instruments issued by corporations to raise capital. They represent a loan from investors to the corporation. When a corporation issues bonds, it promises to pay the bondholders a specific interest rate, called the coupon rate, at regular intervals (usually semi-annually) and repay the principal amount borrowed at the bond's maturity date. The main advantage of bonds for corporations is that they can raise large amounts of capital at a relatively lower cost than equity financing, especially if the company has a good credit rating. The main disadvantage is that the corporation must meet its interest payment obligations and eventually pay back principal amount, regardless of its financial performance.

Common stock is a type of equity financing in which a corporation issues shares of ownership to raise capital. Shareholders who own common stock are entitled to certain rights, such as voting on important company decisions and receiving dividends if declared by the corporation. The main advantage for corporations in raising capital through common stock is that there are no fixed interest payments or repayment schedules, which provides financial flexibility. However, issuing common stock dilutes ownership and control for existing shareholders. Moreover, common stockholders have the lowest priority claim on assets and earnings in the event of bankruptcy or liquidation.

Preferred stock is another form of equity financing where a corporation issues a special class of shares that have certain privileges over common stock. Preferred stockholders usually have priority over common stockholders in receiving dividends and claims on assets in the event of bankruptcy or liquidation. The dividend rate for preferred stock is usually fixed and must be paid before any dividends are distributed to common stockholders. Preferred stock can be advantageous for corporations seeking to raise capital, as it carries a lower cost of capital than common stock and doesn't dilute equity ownership as much. However, preferred stockholders do not have voting rights like common stockholders.

Convertible securities are hybrid instruments that a corporation can issue to raise capital. They can be either bonds or preferred stock, but with a unique feature that allows investors to convert them into a fixed number of common shares at a specified conversion ratio. The major advantage of issuing convertibles is that it allows corporations to raise capital at a lower cost than issuing straight bonds or preferred stock because investors find the potential for future equity growth attractive. The main disadvantage is that it can lead to dilution of equity ownership when investors convert their securities into common stock.