Disadvantages of debt financing over equity financing include all of the following EXCEPT which one?
A) the debt must be repaid regardless of the profitability of the company
B) the company must make interest payments to bondholders regardless of the profitability of the company
C) unfavourable economic conditions can affect the level of interest rates
D) major bondholders can exert significant pressure on company management

Question

Quizplus · Accepted Answer

The statement "major bondholders can exert significant pressure on company management" is an advantage of debt financing as it can help improve the discipline and decision-making process of the company. The other options are disadvantages of debt financing.

Disadvantages of Debt Financing Over Equity Financing Include All of the Following