Issuing bonds has the following disadvantage.

Question

Quizplus · Accepted Answer

Issuing bonds requires the company to pay interest on a periodic basis regardless of its earnings. This results in a fixed financial obligation, which can be a disadvantage if the company experiences financial difficulties. Bondholders do not have voting rights (A) unless they are convertible bondholders. Bond interest expense is generally tax-deductible (B), which makes bonds a tax-efficient form of financing. Bondholders may require early repayment (D) only if the bond agreement includes a provision for early repayment.

Issuing Bonds Has the Following Disadvantage