A Disadvantage of Bond Financing Is

question 161

Multiple Choice

A disadvantage of bond financing is:

• A)Bonds do not affect owners' control.
• B)Interest on bonds is tax deductible.
• C)Bonds can increase return on equity.
• D)It allows firms to trade on the equity.
• E)Bonds pay periodic interest and the repayment of par value at maturity.

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Definitions:

Functional Fixedness

An intellectual prejudice that prevents a person from considering unconventional uses for an object, thereby limiting creative problem-solving capabilities.

Creative Solution

An innovative and effective response or method developed to address a problem or challenge.

Functional Fixedness

A cognitive bias that limits a person to use an object only in the way it is traditionally used, which can inhibit problem-solving and creativity.

Makeshift Nutcracker

An improvised tool or device used to crack nuts, fashioned from materials at hand when a traditional nutcracker is not available.