One Advantage of Issuing Bonds Instead of Stock Is That

question 133

Multiple Choice

One advantage of issuing bonds instead of stock is that:

• A)Interest is tax deductible,whereas dividends are not.
• B)Bonds have a longer maturity date.
• C)Interest rates are lower than dividend rates.
• D)The issuance of bonds does not affect earnings per share.

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Definitions:

Proprietorships

The simplest form of business organization owned by a single person, responsible for all the business’s operations and liabilities.

Partnerships

A business structure where two or more individuals manage and operate a business in accordance with the terms and objectives set out in a Partnership Agreement.

Net Investment

The total amount spent by a company or economy on capital assets, minus depreciation.

Fixed Investment

Expenditure on physical assets like buildings, machinery, and equipment by companies that will be used for more than a year.