All of the following are advantages of issuing bonds EXCEPT that:
A)it generally results in no voting rights.
B)interest expense is tax deductible.
C)it does not dilute control of the corporation.
D)it is less risky to the issuing corporation.

Question

Quizplus · Accepted Answer

Issuing bonds is not less risky to the issuing corporation. Bondholders have a legal claim on a corporation's assets and are entitled to receive interest and principal payments before stockholders receive any dividends. Therefore, issuing bonds increases the financial risk of the issuing corporation. Options A, B, and C are advantages of issuing bonds.

All of the Following Are Advantages of Issuing Bonds EXCEPT