Since they require less monitoring of firms,________ contracts are used more frequently than ________ contracts to raise capital.
A)debt;equity
B)equity;debt
C)debt;loan
D)equity;stock

Question

Quizplus · Accepted Answer

Debt contracts typically have fewer monitoring requirements than equity contracts, which require ongoing disclosure of financial information and performance. Therefore, debt contracts are used more frequently than equity contracts to raise capital, as they offer less scrutiny by investors and regulators.

Since They Require Less Monitoring of Firms,________ Contracts Are Used