Profitable Companies Often Prefer to Issue Debt Rather Than Preference

question 90

Multiple Choice

Profitable companies often prefer to issue debt rather than preference shares because

• A)debt creates less risk for the company.
• B)interest payments are fixed but preference shareholders expect dividends to grow.
• C)preference shares dilute the voting rights of ordinary shareholders but bonds do not.
• D)interest on debt is deductible for tax purposes,but preferred dividends are not.

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Definitions:

Task Variety

The degree to which a job involves different activities and skills, enriching the work experience and potentially increasing job satisfaction.

Job Enlargement

The process of increasing the variety and number of tasks that an employee performs within their job role.

Separate Workers

The practice of segregating employees based on certain criteria, which can potentially lead to issues such as discrimination.

Job Simplification

The process of breaking down jobs into their simplest components and removing unnecessary tasks to increase efficiency.