Which of the Following Is a Major Difference Between Debt

question 32

Multiple Choice

Which of the following is a major difference between debt financing and equity financing?

• A) Equity financing has a specific maturity period, whereas debt financing usually has no specific maturity period.
• B) Debt financing is not linked to organizational performance, unlike equity financing.
• C) Equity holders have primary claims on assets unlike debt financiers.
• D) Payments to equity holders reduce taxable income, whereas debt payments are not tax deductible.
• E) Debt financing is used to cover long-term expenses, whereas equity financing is used for current expenses.

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Definitions:

Lactase

An enzyme in the small intestine that enables humans to assimilate lactose (milk sugar).

Melanin

A pigment found in most organisms, responsible for coloration of the skin, hair, and eyes, and protection against UV radiation.

Vitamin D

A fat-soluble vitamin essential for healthy bones and immune function, obtained from sunlight exposure, food, and supplements.

Lactose Intolerance

The inability to fully digest lactose, a sugar found in milk and dairy products, leading to digestive problems.