Which of the following is false regarding the issue of stock versus the issue of bonds to raise capital?

Question

Quizplus · Accepted Answer

Issuing bonds does not dilute the voting power of the stockholders as bonds do not grant voting rights to their holders. A is true as the issuance of stock decreases financial ratios such as earnings per share and return on equity. C is true because corporations are not required to return the investment to the stockholders, unlike bonds which have a predetermined repayment date and interest rate. D is true as investors expect to earn a higher rate of return on stocks than on bonds due to the higher risk associated with stocks.

Which of the Following Is False Regarding the Issue of Stock