Which two terms best fit the blanks in the following statement: "When compared with equity finance, debt finance is and for the company."?
A) cheaper; less risky
B) cheaper; more risky
C) more expensive; less risky
D) more expensive; more risky

Question

Quizplus · Accepted Answer

Debt finance is cheaper than equity finance because it does not require the company to give up any ownership or control. However, it is also more risky for the company because the company is obligated to make regular interest payments and repay the principal amount of the debt.

Which Two Terms Best Fit the Blanks in the Following