Which of the Following Is an Advantage of Debt Financing

question 130

Multiple Choice

Which of the following is an advantage of debt financing?

• A)It does not have to be repaid.
• B)Interest is discretionary.
• C)Interest is tax deductible.
• D)It reduces stockholder control.

---

Definitions:

Expected Utility Maximizer

A theoretical concept in economics and decision theory where an individual chooses among risky options by selecting the option with the highest expected utility.

Event

An occurrence or happening, often of significance and usually a distinct piece of time.

Certainty Equivalent

The guaranteed amount of money that an individual would view as equally desirable to a risky gamble.

Probability

A measure of the likelihood of a certain event or outcome, expressed as a number between 0 and 1.