The Owners of Preferred Pet Care,Inc

question 76

Multiple Choice

The owners of Preferred Pet Care,Inc. ,a mobile pet care company,have approached you about obtaining long-term financing.They must choose between debt financing and equity financing.Which of the following statements reflects accurate information that you share with this company?

• A)The sale of stock equity financing)will result in a greater pool of funds.Debt financing is less risky and increases leverage,but it seldom results in the owners securing the total amount of funds needed.
• B)The sale of bonds is more risky because they always require collateral and an interest rate that exceeds the cost of capital.
• C)The interest paid to banks and bondholders is tax deductible.
• D)Equity financing usually comes with a lower cost of capital.

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Definitions:

Statistical Regression

A measure of the relationship between the mean value of one variable and corresponding values of other variables.

One-shot Case Study

An experimental design where a single group is exposed to a treatment and then measured to assess its effect, lacking a control group for comparison.

Study Habits

Patterns and practices that are conducive to effective learning and information retention.

Causal Inference

The process of drawing conclusions about causal relationships based on the conditions of the occurrence of an effect.