Which of the Following Is an Advantage of Debt Financing

question 130

Multiple Choice

Which of the following is an advantage of debt financing?

• A)It does not have to be repaid.
• B)Interest is discretionary.
• C)Interest is tax deductible.
• D)It reduces stockholder control.

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Definitions:

Equity Method

An accounting technique used for recording investments in associated companies where the investor has significant influence but does not control the company outright.

Voting Stock

Shares that give the shareholder the right to vote on matters of corporate policy and the election of the board of directors.

Dividend Revenue

Dividend revenue is income received from owning shares in a company that pays dividends.

Long-Term Investment

Investments in securities or other assets that a company intends to hold for a period exceeding one year to earn revenue or influence business operations.