Debt Is Often Considered to Be Generally Less Expensive Than

question 8

Multiple Choice

Debt is often considered to be generally less expensive than equity because:

• A)debt costs less to acquire than equity.
• B)the transactions costs associated with debt are generally less than those associated with equity.
• C)dividends are tax-deductible.
• D)interest payments on debt are tax-deductible and reduce the payor's taxable income.

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Definitions:

Government Regulation

Rules set by the government to control the way businesses can operate within an economy.

Production Costs

The expenses incurred during the process of creating a good or service, including labor, materials, and overhead costs.

Business Monopoly

A market structure characterized by a single seller or firm dominating the entire market, often leading to less competition and higher prices.

Price Equal

A situation where the market price stabilizes, reaching a point where supply equals demand.