The Tax Deductibility of the Interest Payments on Corporate Debt

question 31

Multiple Choice

The tax deductibility of the interest payments on corporate debt is known as ____.

• A) the tax structure
• B) the tax shield
• C) the optimal capital structure
• D) Section 402a of the IRS tax code

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Definitions:

Scoria

A type of volcanic rock characterized by its vesicular texture and low density, formed from cooling lava.

Vesicular Basalt

A type of igneous rock characterized by a porous structure due to gas bubbles trapped in the lava during solidification.

Pillow Basalts

Pillow basalts are bulbous, spherical lava formations created when lava erupts underwater or flows into water, rapidly cooling and solidifying.

Composite Volcano

A type of volcano formed by the eruption of viscous lava along with ash and rock, characterized by steep profiles and periodic, explosive eruptions.