Debt Financing Can Add Value to a Firm Because ________

question 34

Multiple Choice

Debt financing can add value to a firm because ________.

• A) it enables investors and firms to develop long term relationship through a joint business endeavor
• B) some governments allow firms to deduct interest payments from their taxes
• C) it limits the risk of bankruptcy
• D) it increases the cash flow toward the company compared to equity financing

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Definitions:

Psychoanalytic Theory

A theory of psychology proposed by Freud that aims to explain human behavior through unconscious motives, conflicts, and past experiences.

Freud

Sigmund Freud, an Austrian neurologist and the founder of psychoanalysis, a method for treating psychopathology.

Psychosexual Theory

A theory proposed by Sigmund Freud that suggests human development occurs in a series of fixed stages, each characterized by sexual pleasure centered on a particular part of the body.

Oral

Pertaining to the mouth or oral phase in psychosexual development, where pleasure is centered on oral activities such as sucking and biting.