Which of the following is a disadvantage of an income trust?
A) income trusts do not offer the potential for capital appreciation
B) income trusts never provide stable cash flows
C) only immature companies that do not have a regular cash flow can create income trusts
D) unitholders of income trusts have a lower claim on assets than the holders of debt securities

Question

Quizplus · Accepted Answer

Unitholders of income trusts have a lower claim on assets than the holders of debt securities. While income trusts do offer stable cash flows, potential for capital appreciation, and can be used by mature companies, the lower claim on assets is a clear disadvantage.

Which of the Following Is a Disadvantage of an Income