Which of the Following Is Not an Advantage of Debt

question 21

Multiple Choice

Which of the following is not an advantage of debt?

• A) Debt is paid back in "cheaper" dollars during inflationary periods.
• B) Bondholders have no control over the actions of management.
• C) Cost of debt can lower the weighted overall cost of capital.
• D) All of these are advantages.

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Definitions:

Buffer Inventory

Inventory kept in reserve to protect against unforeseen supply or demand fluctuations.

Supply Chain Inventory

This is the total of all the goods and raw materials held by different companies participating in the supply chain from production to the sale of the final product.

Physical Flow

The movement of physical goods and materials through a supply chain from suppliers to consumers.

Fixed-Period Inventory

A system of inventory management where stock levels are reviewed at set intervals and orders are placed as needed.