One Potential Advantage of Financing Corporations Through the Use of Bonds

question 86

Multiple Choice

One potential advantage of financing corporations through the use of bonds rather than common stock is

• A) the interest on bonds must be paid when due
• B) the corporation must pay the bonds at maturity
• C) the interest expense is deductible for tax purposes by the corporation
• D) a higher earnings per share is guaranteed for existing common shareholders

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Definitions:

Team Work

The collaborative effort of a group to achieve a common goal or to complete a task in the most effective and efficient way.

Individualistic

Describing a cultural orientation or personal behavior that emphasizes the importance of personal goals, autonomy, and self-reliance over group interests.

High-Context Cultures

Cultures that rely on non-verbal and situational cues as well as on spoken or written words in communication.

Situational Cues

Environmental signals or triggers that can influence behavior or perceptions in specific contexts.