Bonds are a popular source of financing because a. financial analysts tend to downgrade a company that has raised large amounts of cash by frequent issues of stock. b. a company having cash flow problems can postpone payment of interest to bondholders. c. the bondholders can always convert their bonds into stock if they choose. d. bond interest expense is deductible for tax purposes, while dividends paid on stock are not.

Question

Business

Madyson Munoz

3 November, 18:22

Bonds are a popular source of financing because a. financial analysts tend to downgrade a company that has raised large amounts of cash by frequent issues of stock. b. a company having cash flow problems can postpone payment of interest to bondholders. c. the bondholders can always convert their bonds into stock if they choose. d. bond interest expense is deductible for tax purposes, while dividends paid on stock are not.

+5

Answers (1)

Know the Answer?

Mccormick · Answer 1

Answer:D. Bond interest expenses is deductible for tax purposes while dividend paid on stocks are not.

Explanation:

This stand as an advantage for bonds where tax is only deductible after meeting the total interest expenses.