Which of the Following Is a Reason That a Corporation

question 7

Multiple Choice

Which of the following is a reason that a corporation would prefer to issue stock instead of bonds?

• A)Dividend payments can be deducted for income tax purposes but interest payments cannot.
• B)Expansion is accomplished without surrendering ownership control.
• C)The risk of going bankrupt is less.

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Definitions:

Variable Cost

Spending that rises and falls according to how much is produced or sold, including costs for labor and materials.

Fixed Costs

Expenses that do not vary with the volume of production or sales, such as rent, salaries, and insurance.

Activity Changes

Fluctuations or variations in the operations of a business that can affect its financial performance and necessitate managerial adjustments.

Total Variable Cost

The aggregate of all costs that vary with the level of output, including materials, labor, and other expenses directly tied to the production volume.