Which of the Following Statements Is False

question 21

Multiple Choice

Which of the following statements is false?

• A) Creditors do not have voting power.
• B) Payment on interest on debt in considered an expense, while payment of dividends is a return on capital.
• C) Unpaid debt is a liability of the firm, and if not paid, can result in liquidation of the firm. Unpaid common stock dividends cannot force liquidation.
• D) One of the costs of issuing equity is the possibility of financial distress, while no financial distress is associated with debt.
• E) None of these.

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