Which of the following is not an advantage of issuing bonds instead of common stock?
A) Tax savings result.
B) Income to common shareholders may increase.
C) Earnings per share on common stock may be lower.
D) Stockholder control is not affected.

Question

Quizplus · Accepted Answer

Issuing bonds instead of common stock can lead to tax savings since interest payments on bonds are tax-deductible. It might also increase income to common shareholders because the company can finance operations or expansions at a lower cost than equity. Additionally, stockholder control is not diluted because bonds do not confer voting rights. However, earnings per share (EPS) on common stock may be lower is not an advantage; it's a potential disadvantage, as the interest expenses from bonds can reduce the company's net income, which in turn can reduce the EPS.

Which of the Following Is Not an Advantage of Issuing