Which of the Following Is Not a Disadvantage of Raising

question 80

Multiple Choice

Which of the following is not a disadvantage of raising capital through the issue of bonds payable?

• A)the bonds are classified as a long-term liability
• B)interest must be paid even if the firm suffers a loss
• C)the face amount must be repaid at maturity
• D)interest is deductible for income tax purposes

---

Definitions:

Four-Firm Concentration Ratio

A measure of market concentration, representing the combined market share of the four largest firms in an industry.

Monopolistic Competition

A market structure characterized by many firms selling products that are similar but not identical, allowing them to act as monopolies for their unique products while still facing competition.

Homogeneous

Describes products, goods, or services that are identical in features and quality, making them indistinguishable from one another to consumers.

Pure Competition

A market structure characterized by a large number of small firms, a homogeneous product, and very easy entry and exit.