Which of the following statements concerning bonds are correct?
I.Bonds provide tax benefits to issuers.
II.The risk of a firm financially failing increases when the firm issues bonds.
III.Most long-term bond issues are referred to as unfunded debt.
IV.All bonds are treated equally in a bankruptcy proceeding.

Question

Quizplus · Accepted Answer

I. Bonds often provide tax benefits to issuers because the interest payments on bonds are tax-deductible.II. Issuing bonds increases a firm's financial obligations due to the required interest payments, thus potentially increasing the risk of financial failure if the firm cannot meet these obligations.

Which of the Following Statements Concerning Bonds Are Correct