Which of the Following Is an Advantage for a Firm

question 81

Multiple Choice

Which of the following is an advantage for a firm to issue common stock over long-term debt?

• A) the cost of equity financing being less than the cost of debt financing
• B) the primary claim of equityholders on income and assets in the event of liquidation
• C) no maturity date on which the par value of the issue must be repaid
• D) the tax deductibility of dividends which lowers the cost of equity financing

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Definitions:

Validity

In logic and reasoning, it refers to the attribute of an argument where if the premises are true, the conclusion necessarily follows.

Validity Rules

The set of rules or criteria used to assess whether the logical structure of an argument is valid, ensuring that if the premises are true, the conclusion necessarily follows.

Fallacy

An error in reasoning that renders an argument invalid, often due to irrelevant premises or faulty connections between ideas.

Syllogism

A form of reasoning in which a conclusion is drawn from two given or assumed premises, each of which shares a term with the conclusion.