Which of the Following Is NOT a Reason Why Debt

question 76

Multiple Choice

Which of the following is NOT a reason why debt capital is considered to be the least risky source of capital?

• A) It has a high priority claim against assets and earnings.
• B) It has a strong legal position.
• C) It is a low cost source of capital because interest payments are tax deductible.
• D) It does not normally have to be repaid at a specific future date.

---

Definitions:

Advancement in Technology

Improvements and innovations in technology that enhance productivity, efficiency, and often lead to the creation of new products or services.

Technological Advance

The improvement or innovation in technology that increases productivity, efficiency, or brings new products and services to the market.

Production of Automobiles

The process involving the design, manufacturing, and marketing of cars and other vehicles.

Supply Curve

A graphical representation that shows the relationship between the price of a good and the quantity supplied.