Which of These Is a Disadvantage to Shareholders of Using

question 45

Multiple Choice

Which of these is a disadvantage to shareholders of using long-term debt rather than equity?

• A) Interest is tax deductible
• B) Interest payments must be made on time regardless of a reduction in profitability
• C) Lenders do not share in excess profits
• D) Lenders do not have voting rights

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Definitions:

Group Member

An individual who is a part of a collective or team, contributing to the group's objectives and activities.

Group Cohesion

The strength of the relationships linking members of a group to one another and to the group itself.

Bruce Tuckman

An educational psychologist known for his model of group development stages, including forming, storming, norming, performing, and adjourning.

Forming Stage

The initial phase of team development where members meet, form initial impressions, and begin to establish team norms and roles.