Debt is often a more attractive vehicle for financing long-term investments for which of the following reasons? 1.Debt is less risky than common stock.
2)Debt may be converted into common stock in a tax-free exchange.
3)Interest payments are tax deductible,and dividend payments are not.
4)Ownership rights are kept by the present stockholders.
A)3 and 4
B)1 and 3
C)2 and 4
D)1 and 2
E)1,2,3,and 4

Question

Quizplus · Accepted Answer

3) Interest payments on debt are tax deductible, which can lower the overall cost of financing. 4) Using debt does not dilute the ownership stake of current shareholders, as issuing new equity would.

Debt Is Often a More Attractive Vehicle for Financing Long-Term