DECA+ Business Management and Administration Practice Exam

Corporate bonds are primarily utilized by companies to raise capital for various purposes, and funding operating expenses is one of the most common applications. When a company issues corporate bonds, it is essentially borrowing money from investors with a promise to pay back the principal along with interest over a specified period. This influx of capital allows the corporation to cover day-to-day operational costs, expand its business, or invest in new projects without giving up ownership stakes, as would be the case with equity financing. While funding employee training programs can be an important part of a company's budget, it typically falls within the operational expenses. Operational expenses might include salaries, rent, and utilities, along with investments in training. However, utilizing bonds specifically for employee training is not a common reason for issuing them, as the funds are generally allocated for broader operational or growth-oriented purposes. Investing in real estate properties and purchasing stocks in other companies are more specific strategies that companies may undertake to utilize their funds, but they are not the primary function of issuing corporate bonds. Those investments might come from the general funds raised through bond issuance, yet they do not reflect the core intention behind corporate bonds, which is to ensure the smooth functioning of a corporation’s operations.