All of the Following Are Advantages of Issuing Stock EXCEPT

question 40

Multiple Choice

All of the following are advantages of issuing stock EXCEPT that it:

• A) creates no interest expense which must be paid.
• B) is less risky to the issuing corporation.
• C) creates no liabilities for the corporation.
• D) generally results in a higher earnings per share.

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Definitions:

Total Interest Expense

The sum of all interest payments made on debts over a specified period.

Debt-to-Equity Ratio

A measure showing the balance of debt versus shareholders' equity employed in the procurement of company assets.

Financed

The process of providing or securing funds for business activities, purchases, or investments.