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:

Republicans

A political party in the United States, historically starting as a platform against the spread of slavery in the territories before the Civil War, and currently known for advocating conservative positions on economics, national defense, and social issues.

Democrats

A member or supporter of the Democratic Party in the United States, one of the two major contemporary political parties in the country, generally associated with liberal, progressive, and socially democratic policies.

Reconstruction Amendments

The 13th, 14th, and 15th amendments to the United States Constitution, passed after the Civil War, which abolished slavery, granted citizenship rights, and protected voting rights for all men regardless of race.

Constitution

The supreme law of the United States, adopted in 1787, outlining the nation's government structure, its fundamental principles, and the rights of its citizens.