A disadvantage of issuing stock instead of debt is that stock:
A)creates no interest expense which must be paid.
B)is less risky to the issuing corporation.
C)creates no liabilities for the corporation.
D)generally results in lower earnings per share.

Question

Quizplus · Accepted Answer

Issuing stock can dilute existing shareholders' ownership, potentially leading to lower earnings per share as profits are spread over a larger number of shares.

A Disadvantage of Issuing Stock Instead of Debt Is That