The Major Advantages of Long-Term Debt Include All the Following

question 71

Multiple Choice

The major advantages of long-term debt include all the following EXCEPT _______.

• A) decreased financial risk
• B) relatively low after-tax cost
• C) firm owners' ability to maintain control over their firm
• D) increased earnings per share through financial leverage

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Definitions:

Profit-Maximizing

A strategy or process aimed at increasing a company's profits to the highest possible level.

Marginal Cost

The increase in cost that arises from producing one additional unit of a good or service.

Output Effect

The impact on total output or production due to a change in selling price, affecting the quantity sold.

Price Effect

The impact on consumer demand and consumption patterns caused by changes in the price of goods or services.