Which of the Following Is NOT an Advantage for a Firm

question 44

Multiple Choice

Which of the following is NOT an advantage for a firm of using equity rather than debt financing?

• A)Lower cost.
• B)Lower risk of insolvency.
• C)Lower funding risks.
• D)No legal liability to pay dividends.
• E)No requirement to repay capital.

---

Definitions:

Nondiscretionary Fiscal Policy

Government fiscal policies that are automatic stabilizers, such as taxation and welfare spending, which work without specific government intervention.

Automatic Stabilizers

Economic strategies and initiatives aimed at stabilizing a country's economic fluctuations without further action from the government or policy makers.

Built-in Stabilizer

Economic policies or instruments, like progressive taxation and welfare, that automatically reduce the amplitude of economic fluctuations without additional government intervention.

Progressive Income Tax

A tax system in which the tax rate increases as the taxable amount increases, generally applied to income tax to ensure higher earners pay a larger percentage of their income.