From the Standpoint of the Issuing Company, a Disadvantage of Using

question 51

Multiple Choice

From the standpoint of the issuing company, a disadvantage of using bonds as a means of long-term financing is that

• A) bond interest is deductible for tax purposes.
• B) interest must be paid on a periodic basis regardless of earnings.
• C) income to shareholders may increase as a result of trading on the equity.
• D) the bondholders do not have voting rights.

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Definitions:

Malthusian Theory

A theory proposed by Thomas Malthus suggesting that the potential for population growth exceeds the rate at which resources can be produced, leading to inevitable shortages and famine.

World Hunger

A severe and chronic lack of food that threatens life, health, and wellbeing, affecting millions of people worldwide.

Malthusian Theory

A principle suggesting that population growth will outpace agricultural production, leading to widespread poverty and famine.

Law of Diminishing Returns

An economic principle stating that adding more of one factor of production, while holding others constant, will at some point yield lower per-unit returns.