The Advantage to a Corporation of Issuing Bonds Instead of Stock

question 121

Multiple Choice

The advantage to a corporation of issuing bonds instead of stock is that

• A)The owners keep control of the company.
• B)Bond prices do not fluctuate.
• C)The owners do not have to make interest payments on the loan.
• D)The possibility of default is lower when bonds are issued.

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Definitions:

Bonds Payable

A financial accounting term that represents the amount owed by an entity to bondholders, typically a long-term liability on a company's balance sheet associated with borrowing through issuing bonds.

Separate Schedule

A detailed plan or chart made independently from other planning documents, focusing on specific activities or resources.

Statement of Cash Flows

A financial statement that provides aggregate data regarding all cash inflows and outflows a company receives from its ongoing operations and external investment sources.

Investing Activities

Transactions related to the acquisition or disposal of long-term assets and other investments not included in cash equivalents.