Which of the Following Is True of the Advantages of Raising

question 29

Multiple Choice

Which of the following is true of the advantages of raising corporate debt through bank loans?

• A) Capital gains on debt are not taxed.
• B) Costs associated with monitoring debt are low.
• C) Equity capital costs are low.
• D) Corporations are equally inclined to use debt and equity.
• E) The threat of potential bankruptcy is high in equity financing compared to bank loans.

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Definitions:

Freons

A trademarked name for a group of chlorofluorocarbon (CFC) and hydrochlorofluorocarbon (HCFC) gases used primarily as refrigerants and aerosol propellants, now commonly linked to ozone depletion.

Propellants

Chemicals that are used to propel an object by generating gas under pressure; common in rockets and aerosol cans.

Aerosol Cans

Containers that use pressurized gas to dispense substances in a fine spray.

N-hexane

A straight-chain alkane with the formula C6H14, used as a non-polar solvent in the extraction of edible oils from seeds and vegetables.