Which of the following statements is correct?
A)The expected future profitability of a corporation influences the demand for that corporation's stock.
B)When a corporation sells stock as a means of raising funds it is engaging in debt finance.
C)The owners of bonds sold by the Microsoft Corporation are part owners of that corporation.
D)All bonds are,by definition,perpetuities.

Question

Quizplus · Accepted Answer

The expected future profitability of a corporation influences investors' expectations of future earnings, which impacts the demand for the corporation's stock.

Answer: None of the other options are correct.

B) Selling stock is considered equity finance, not debt finance.
C) Bondholders are creditors of the corporation, not part owners.
D) Perpetuities refer to bonds with no maturity date, but not all bonds are perpetuities. Bonds can have a fixed maturity date, typically ranging from a few years to several decades.

Which of the Following Statements Is Correct