A Disadvantage of Issuing Stock Instead of Debt Is That

question 100

Multiple Choice

A disadvantage of issuing stock instead of debt is that stock:

• A)creates no interest expense which must be paid.
• B)is less risky to the issuing corporation.
• C)creates no liabilities for the corporation.
• D)generally results in lower earnings per share.

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Definitions:

Strategic Planning

The process of defining a direction for an organization by setting goals, determining actions to achieve the goals, and mobilizing resources to execute the actions.

External Threat

A danger or risk stemming from the environment outside of oneself or one's organization.

Reciprocal-Concession Effect

A psychological principle where individuals feel compelled to make concessions to others when concessions are made to them, particularly in negotiation contexts.

Social Facilitation

The tendency to perform simple or well-practiced tasks better in the presence of others than alone.