Which of the Following Would Be a Good Reason to Choose

question 13

Multiple Choice

Which of the following would be a good reason to choose to make an equity investment in a corporation rather than lending money to a corporation?

• A)The return paid on an equity investment is more secure than the return on debt.
• B)The holder of an equity investment always receives a higher return than a debt holder.
• C)The holder of equity has the same legal entitlement to receive dividends as a debt holder has to receive interest.
• D)The return on equity is riskier than debt but is not fixed and may be higher.
• E)It is easier to assess the price of an equity investment.