Which of the Following Is True of Equity Holders and Debt

question 10

Multiple Choice

Which of the following is true of equity holders and debt holders?

• A)Debt holders have a contract specifying that their claims must be paid before the firm can make payments to its equity holders.
• B)Payments to equity holders are tax-deductible expenses of the firm,whereas the payments to bond holders are not tax-deductible.
• C)Equity holders cannot transfer their ownership interest to others,whereas debt holders can transfer their claims over the assets of the firm.
• D)Equity holders have noting voting rights on policies related to dividends,whereas debt holders have can vote on dividend related policies.

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Definitions:

MODE.SNGL(data range)

A statistical function that returns the most frequently occurring value in a given data range.

Arithmetic Mean

The sum of a collection of numbers divided by the count of numbers in the collection, commonly known as the average.

Midrange

The statistical measure calculated by taking the average of the highest and lowest values in a data set.

Mode

The value that appears most frequently in a data set.