From a social welfare perspective,common stock is a desirable form of financing in part because it involves no fixed charge payments.Its inclusion in a firm's capital structure makes the firm less vulnerable to the consequences of unanticipated declines in sales and earnings than if only debt were available.

Question

Quizplus · Accepted Answer

Common stock does not involve fixed charge payments, which can be beneficial for a firm's financial stability in case of unexpected decreases in sales or earnings. This aligns with a social welfare perspective, which aims to promote the well-being of society as a whole.

From a Social Welfare Perspective,common Stock Is a Desirable Form