Corporations try to create hybrid securities that look like equity but are called debt because:
A)debt interest expense is tax deductible.
B)bankruptcy costs are eliminated or reduced.
C)these securities are lower is risk than debt.
D)Both A and C.
E)Both A and B.

Question

Quizplus · Accepted Answer

Corporations create hybrid securities that look like equity but are called debt because it eliminates or reduces bankruptcy costs and debt interest expense is tax deductible.

Corporations Try to Create Hybrid Securities That Look Like Equity