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:

Categorical Proposition

A statement that asserts or denies something about every member of a category.

Quantifier

A term or phrase, typically in logic, that specifies the quantity of specimens in the domain of discourse to which the predicate applies.

Categorical Proposition

A statement asserting or denying that all or some of the members of one category are included in another.

Predicate Term

An expression that conveys a property that a subject can have or a relation that can exist between the subject and another entity.