What advantage does a company gain by issuing corporate bonds?

The primary advantage a company gains by issuing corporate bonds is access to funds for expansion and projects. When companies issue bonds, they are effectively borrowing money from investors for a defined period of time, agreeing to pay them back with interest at maturity. This influx of capital can be directed towards various initiatives such as expanding operations, investing in new technologies, or funding large projects that could drive future growth.

By utilizing bond financing, companies can maintain their equity structure while obtaining the necessary resources to undertake potentially lucrative ventures. This approach can be particularly advantageous, as it allows for leveraging debt to enhance returns on equity if the investment made with the borrowed funds generates more income than the cost of the interest on the bonds.

The other options do not accurately reflect the benefits of issuing corporate bonds. While issuing bonds does result in immediate cash flow into the business, the primary focus of bond issuance is on generating capital for future projects rather than merely inflating cash assets. Bonds inherently involve paying interest, which contradicts the notion of avoiding interest payments. Lastly, issuing bonds is different from increasing equity through stock issuance, as bonds represent debt rather than ownership in the company.