The Main Advantage of Debt Financing for a Firm Is

question 10

Multiple Choice

The main advantage of debt financing for a firm is:
I. no SEC registration is required for bond issue
II. interest expense of a firm is tax deductible
III. unlevered firms have higher value than levered firms

• A) I only
• B) II only
• C) III only
• D) I and III only

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Definitions:

Relatedness

The need to interact, be connected to, and experience caring for others, considered a fundamental psychological need.

Homeostasis

The tendency of a biological system to maintain stable internal conditions despite external changes.

Drive-reduction Approach

A theory in psychology that posits motivation arises from the need to reduce drives from physiological states of tension, such as hunger or thirst.

Motivation Approach

The study or practice of understanding the processes that activate, guide, and maintain goal-oriented behaviors.