Which of the Following Is a Difference Between Debt and Equity

question 141

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