One Reason a Corporation Might Issue Bonds Rather Than Selling

question 15

Multiple Choice

One reason a corporation might issue bonds rather than selling stock is that:

• A) bond interest is a tax-deductible expense.
• B) interest rates are high.
• C) dividends will lower the amount of tax due.
• D) bondholders have claims at liquidation.

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Definitions:

Consumption

The use of goods and services by households, constituting one of the primary components of economic activity and indicators of economic health.

Income

Financial returns received, usually on a steady basis, from work or investment profits.

Expenditure

The action of spending funds or the amount of money spent on goods, services, or other expenses.

Gross Domestic Product

The total market value of all finished goods and services produced within a country's borders in a given time period, reflecting the overall economic health.