Why Would a Corporation Issue Bonds Payable Instead of Issuing

question 175

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) Debt affects the percentage of ownership of the corporation by the stockholders.
• D) Debt does not have to be shown on the balance sheet.

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Definitions:

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An officially recognized or approved method for determining a fact or figure, often used in statistics or research.

Lorenz Curve

A graphical representation of the distribution of income or wealth within a society, demonstrating inequality.