Under Federal tax law, a bias exists in favor of debt, as compared to equity, when financing the operations of a corporation.

Name: Under Federal tax law, a bias exists in favor of debt, as compared to equity, when financing the operations of a corporation.
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This is because interest on debt is tax-deductible, while dividends paid on equity are not deductible. This bias results in corporations having a greater incentive to finance their operations through debt rather than equity.

Under Federal Tax Law, a Bias Exists in Favor of Debt