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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Definitions:

Nuclear Fusion

A process where two light atomic nuclei combine to form a heavier nucleus, releasing a large amount of energy, potentially providing a sustainable source of power.

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Defining Characteristic

A feature or quality that establishes the distinct nature or identity of something.

Biotic Portion

The segment of an ecosystem that consists of all living organisms, including plants, animals, and microorganisms, and their interactions.