Why Would a Corporation Issue Bonds Payable Instead of Issuing

question 104

Multiple Choice

Why would a corporation issue bonds payable instead of issuing stock?

• A)Debt is a less expensive source of capital than stock.
• B)Borrowing by issuing bonds payable carries no risk to the company.
• C)Debts affect the percentage of ownership of the corporation by the stockholders.
• D)Debts don't carry any cost.

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Definitions:

Idiosyncratic Reaction

An unusual or unexpected reaction to a drug that is not related to the dose or duration of exposure.

Toxic Effect

Harmful physiological effects caused by exposure to toxic substances or chemicals.

Controlled Substances

Drugs or chemicals whose manufacture, possession, and use are regulated by the government due to their potential for abuse or addiction.

Unused Quantities

Items or substances not yet utilized or consumed.