Those Who Benefit from the Interest Tax Shield Are

question 44

Multiple Choice

Those who benefit from the interest tax shield are:

• A) debtholders.
• B) equityholders.
• C) both debtholders and equityholders.
• D) only the firm's customers.

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Definitions:

Option

A financial derivative that gives the buyer the right, but not the obligation, to buy or sell an underlying asset at a specified price on or before a specified date.

Call Option

An economic agreement that provides the bearer the option, without the necessity, to purchase a share, bond, commodity, or different asset at an agreed-upon price during a determined timeframe.

Derivative Security

A financial security whose value is determined by or derived from an underlying asset or group of assets, such as stocks, bonds, commodities, or market indices.