The Lower Risk Nature of Long-Term Debt in a Firm's

question 20

Multiple Choice

The lower risk nature of long-term debt in a firm's capital structure is due to the fact that

• A) dividend payments are tax-deductible.
• B) equity capital has a fixed return.
• C) creditors have a higher position in the priority of claims.
• D) the equity holders are the true owners of the firm.

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Definitions:

Compression

The act of pressing together to reduce size or volume, often used in medical treatments or data reduction techniques.

Taste Buds

Sensory organs located on the tongue's surface that contain the taste receptor cells, which detect different flavors.

Special Sense

refers to the senses that have specialized organs devoted to them, such as vision, hearing, taste, and smell.

General Sense

Pertains to the basic or common understanding of a concept or perception applicable across different contexts.