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:

Egocentrism

In developmental psychology, a characteristic of young children where they are unable to see a situation from another person's point of view.

Three-Mountain Task

A cognitive developmental measure designed by Jean Piaget to study children's ability to take on another's perspective and understand that different viewpoints exist.

Preoperational Child

A developmental stage posited by Piaget, typically aged 2 to 7 years, marked by the beginning use of symbols and language but limited in logical reasoning.

Subtraction

A mathematical operation that represents the process of taking one quantity away from another, resulting in the difference.