From the standpoint of the issuing company, a disadvantage of using bonds as a means of long-term financing is that
A) bond interest is deductible for tax purposes.
B) interest must be paid on a periodic basis regardless of earnings.
C) income to shareholders may increase as a result of trading on the equity.
D) the bondholders do not have voting rights.

Question

Quizplus · Accepted Answer

Interest on bonds must be paid by the issuing company at regular intervals (e.g., semi-annually or annually), regardless of whether the company is making profits or not. This can strain the company's cash resources, especially during periods of low earnings or losses.

From the Standpoint of the Issuing Company, a Disadvantage of Using