Which of the Following Is a Difference Between Debt and Equity

question 103

Multiple Choice

Which of the following is a difference between debt and equity capital?

• A) Debt capital does not require periodic payments, whereas equity capital requires period payments.
• B) Debt capital requires a fixed rate of return, whereas equity capital requires returns in proportion to profits.
• C) Debt capital does not provides a tax shield, whereas equity capital provides a tax shield.
• D) Debt capital affects operating leverage, whereas equity capital affects financial leverage.

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