All of the Following Are Advantages of Debt Financing, Except

question 29

Multiple Choice

All of the following are advantages of debt financing, except:

• A) It's useful for meeting a short-term deficit in cash flow.
• B) The term of the debt (loan) is generally limited.
• C) Interest paid is tax deductible.
• D) If it is a "demand" loan, it can be called by the lender at any time.

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Definitions:

Confidence Interval

A statistical range, with a given probability, that is likely to contain the true value of an unknown parameter.

Small-Company Stocks

Shares of ownership in small-cap companies, often carrying higher risk but potentially offering higher returns compared to shares of larger corporations.

Capital Gains Yield

The change in price of a security over time, expressed as a percentage.

Geometric Average

A method of calculating the average rate of return that considers the compounding effect of returns over time.