From the Standpoint of the Issuing Company, a Disadvantage of Using

question 151

Multiple Choice

From the standpoint of the issuing company, a disadvantage of using bonds as a means of long-term financing is that

• A)bond interest is deductible for tax purposes.
• B)interest must be paid on a periodic basis regardless of earnings.
• C)income to stockholders may increase as a result of trading on the equity.
• D)the bondholders do not have voting rights.

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Definitions:

Structured Problem

A problem that is well-defined, with clear requirements and a known solution methodology.

Unstructured Problem

A problem that lacks clarity in its definition, making it difficult to apply standard or known solutions.

Programmed Decision

A decision that is routine or repetitive, which can be handled using established business rules or procedures.

Crisis

A crisis is a critical or a turning point situation that requires immediate attention and action to prevent or mitigate major negative consequences.