The advantages of obtaining long-term funds by issuing bonds,rather than issuing additional common stock,include which of the following?

Question

Quizplus · Accepted Answer

Issuing bonds allows a company to raise long-term funds without surrendering ownership control, as bonds represent debt rather than equity. Additionally, interest expense on bonds is tax-deductible, reducing the company's tax liability. Finally, issuing bonds can decrease a company's default risk by diversifying its sources of funding and balancing its capital structure. Therefore, both options A and B are correct, making option D the best choice.

The Advantages of Obtaining Long-Term Funds by Issuing Bonds,rather Than