All of the Following Are Advantages of Issuing Bonds EXCEPT

question 171

Multiple Choice

All of the following are advantages of issuing bonds EXCEPT that:

• A)it generally results in no voting rights.
• B)interest expense is tax deductible.
• C)it does not dilute control of the corporation.
• D)it is less risky to the issuing corporation.

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Definitions:

Strike Price

The Strike Price is the fixed price at which the owner of an option can buy (in the case of a call option) or sell (in the case of a put option) the underlying security or commodity.

Derivative Security

A financial instrument whose value is derived from the value of another asset, known as the underlying asset.

Financial Asset

A financial asset refers to any asset that is cash, an equity instrument of another entity, or a contractual right to receive cash or another financial asset from another entity.

Transactions Exposure

The potential for a company's cash flows to be affected by changes in exchange rates due to transactions in foreign currencies.