Which of the Following Is a Reason Why Equity Capital

question 172

Multiple Choice

Which of the following is a reason why equity capital is considered riskier than debt capital?

• A) Equity capital has a higher priority claim against assets and earnings.
• B) Equity capital requires regular periodic payments in the form of dividends.
• C) Equity capital expects dividend payments which are not tax-deductible.
• D) Equity capital remains invested in a firm indefinitely.

---

Definitions:

School Completed

The attainment of education up to a certain level, often resulting in the awarding of a certificate or degree.

Bachelor's Degree

An undergraduate academic degree awarded by colleges and universities upon completion of a course of study lasting three to seven years (depending on institution and academic discipline).

Non-Hispanic Whites

Individuals residing in the United States who identify as white and are not of Hispanic or Latino origin.

African Americans

Individuals in the United States who have ancestry from the black racial groups of Africa.