One advantage of issuing bonds instead of shares is that:
A) Interest is tax deductible whereas dividends are not.
B) Bonds have a longer maturity date.
C) Interest rates are lower than dividend rates.
D) The issuance of bonds does not affect earnings per share.

Question

Quizplus · Accepted Answer

Interest paid on bonds is tax deductible for the company, whereas dividends paid on shares are not. This makes issuing bonds a more tax-efficient way of raising funds.

One Advantage of Issuing Bonds Instead of Shares Is That