Which of the Following Is Not an Advantage of a Company

question 93

Multiple Choice

Which of the following is not an advantage of a company using equity rather than debt to finance a project?

• A)Interest requires more cash than does paying dividends.
• B)Dividends do not need to be paid.
• C)Equity does not need to be repaid whereas debt does.
• D)Interest is tax deductible.

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Definitions:

Financial Statements

Financial statements are formal records of the financial activities and condition of a business, person, or other entity, providing an overview of a company's financial performance and position in the market.

Section 11

A provision of the Securities Act of 1933 that holds issuers liable for material misstatements or omissions in their public offering documents.

Securities Act of 1933

A U.S. law enacted to protect investors by requiring transparency in financial statements so investors can make informed decisions about investments.

Registration Statement

A legal document filed with the Securities and Exchange Commission by companies wishing to issue new securities to the public, containing financial and other significant details.