For a corporation such as AT&T, what are the two primary advantages of equity financing?
A) It never has to be paid back and flotation costs are low.
B) There is no obligation to pay dividends or to repay the money obtained from the sale of stock.
C) Interest payments are less than debt financing and principal does not have to be repaid.
D) Ownership is spread among many individuals and no interest payments are required.
E) Investors pay top dollar for stock issues and the corporation has higher ongoing expenses.

Question

Quizplus · Accepted Answer

The two primary advantages of equity financing for a corporation like AT&T are that there is no obligation to pay dividends or to repay the money obtained from the sale of stock. This is because equity financing involves selling ownership shares in the company, rather than taking on debt that must be repaid with interest. This can provide greater financial flexibility for the company and reduce the risk of default or bankruptcy.

For a Corporation Such as AT&T, What Are the Two