Merits and drawbacks associated with Deep Discount

Question

Write down the merits and drawbacks associated with Deep Discount?

Answer 1

Subsequent are the merits:

i). In this the bond it does not necessitate any help of underwriters or brokers due to their inexpensiveness and there consumption of time.

ii). For unsafe business private placements may be the only source of capital accessible.

iii). Picking of the investors with the particular interest and goals is the job of this type of bond as it also allows small business owners to select for the same.

The drawbacks are illustrated below:-

i) Investors in this case will have complexity in locating themselves as they may be having the sufficient funds to invest.

ii) Private companies put the securities and sell them under their market price or on deep discount.