An advantage of bond financing is:
A) Issuing bonds does not affect shareholder control.
B) Interest on bonds is tax-deductible.
C) Bonds can increase return on equity.
D) Bonds can create financial leverage.
E) All of these answers are correct.

Question

Quizplus · Accepted Answer

All the options listed are advantages of bond financing: A) Bonds do not dilute shareholder control, B) Interest payments on bonds are tax-deductible, C) Bonds can increase return on equity by using borrowed funds to generate higher returns, and D) Bonds can create financial leverage by using debt to increase potential returns.

An Advantage of Bond Financing Is