The Inexpensive Nature of Long-Term Debt in a Firm's Capital

question 15

Multiple Choice

The inexpensive nature of long-term debt in a firm's capital structure is partly because ________.

• A)the equity holders are the true owners of the firm
• B)equity capital has a fixed return
• C)interest payments are tax-deductible
• D)equity holders have a higher position in the priority of claims

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Definitions:

Hippocampus

A major component of the brain, located in the medial temporal lobe, playing important roles in short and long-term memory and spatial navigation.

Fear Responses

The instinctual reactions and behaviors prompted by threats or perceived dangers, part of the body’s fight-or-flight response.

Cerebral Cortex

The outer layer of the cerebrum in the brain, involved in numerous high-level functions such as perception, memory, thought, and complex motor functions.

Pons

a part of the brain located in the brainstem, which is involved in regulating breathing, communication between different parts of the brain, and sensations such as hearing, taste, and balance.