An advantage of bond financing is:
A)Bonds do not affect owners' control.
B)Interest on bonds is tax deductible.
C)Bonds can increase return on equity.
D)It allows firms to trade on the equity.
E)All of the choices are correct.

Question

Quizplus · Accepted Answer

All the choices are correct because bonds do not dilute ownership, interest is tax-deductible, they can enhance return on equity through leverage, and they allow firms to leverage equity.

An Advantage of Bond Financing Is