Which of the following is an advantage of issuing stock rather than issuing bonds?
A) Issuing stock creates interest expense that must be paid.
B) Issuing stock is more risky to the issuing corporation.
C) Issuing stock creates no liabilities.
D) Issuing stock generally results in higher earnings per share.

Question

Quizplus · Accepted Answer

Issuing stock creates no liabilities for the corporation because it represents equity financing, not debt. Unlike bonds, which are a form of debt that requires regular interest payments and repayment of principal, stock issuance provides capital without creating an obligation to repay investors.

Which of the Following Is an Advantage of Issuing Stock