A disadvantage of bond financing is:
A) Bonds do not affect owners' control.
B) Bonds can increase return on equity.
C) Interest on bonds is tax deductible.
D) Bonds pay periodic interest and the repayment of par value at maturity.
E) It allows firms to trade on the equity.

Question

Quizplus · Accepted Answer

Bonds require periodic interest payments and the repayment of the principal amount at maturity, which can be a financial burden on the company.

A Disadvantage of Bond Financing Is