Which of the Following Is a Reason That a Corporation

question 79

Multiple Choice

Which of the following is a reason that a corporation would prefer to issue stock instead of bonds?

• A)Dividend payments can be deducted for income tax purposes but interest payments cannot.
• B)Expansion is accomplished without surrendering ownership control.
• C)The risk of going bankrupt is less.
• D)All of the above are reasons for issuing stock.

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Definitions:

Favorable Supply Shock

An unexpected event that increases the supply of a product or service, leading to a lower equilibrium price and/or an increase in the equilibrium quantity.

Inflation

The pace at which prices for goods and services generally ascend, causing buying power to decline.

Stagflation

A period of falling output and rising prices.

Hyperinflation

An extremely high and typically accelerating rate of inflation, often exceeding 50% per month.