Bonds Are a Popular Source of Financing Because

question 173

Multiple Choice

Bonds are a popular source of financing because

• A)bond interest expense is deductible for tax purposes,while dividends paid on stock are not.
• B)financial analysts tend to downgrade a company that has raised large amounts of cash by frequent issues of stock.
• C)a company having cash flow problems can postpone payment of interest to bondholders.
• D)the bondholders can always convert their bonds into stock if they choose.

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Definitions:

Club Sponsor

Refers to an individual or organization that provides support, often financial, to a club, typically in exchange for advertising opportunities or goodwill.

Customer Demand

The quantity of products or services that consumers are willing and able to purchase at various prices during a specific period.

Computer Clock

A mechanism within a computer that keeps track of time and coordinates the execution of tasks.

Wasted Capacity

Refers to the portion of the potential production output or service capability that remains unused or not effectively utilized.