A Disadvantage of Using Bonds Instead of Stock as a Method

question 41

Multiple Choice

A disadvantage of using bonds instead of stock as a method of long-term financing is that with bonds:

• A)interest must be paid regardless of the level of earnings.
• B)interest expense is tax deductible.
• C)bonds do not dilute stockholders' proportionate ownership.
• D)issuing bonds results in higher earnings per share than issuing common stock.

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Definitions:

Disagreements

Occurrences of divergent views, opinions, or arguments between individuals or groups.

Sigmund Freud

A neurologist from Austria who established psychoanalysis as a method for addressing mental disorders through conversational therapy between a psychoanalyst and their patient.

Carl Jung

A Swiss psychiatrist and psychoanalyst who founded analytical psychology, known for concepts like the collective unconscious, archetypes, and psychological types.

Finalism

The belief or theory that explains phenomena in terms of purposes rather than causes, particularly in relation to the development or evolution of something.