Long-term debt imposes financing risk because it
A)decreases the need for shareholders' equity.
B)requires principal and interest payments.
C)requires a default before filing for bankruptcy.
D)can result in default, creditor or regulatory intervention in the management of the firm.
E)None of these answer choices is correct.

Question

Quizplus · Accepted Answer

Long-term debt imposes financing risk because it requires regular principal and interest payments, which can strain a company's cash flow and lead to financial distress if the company is unable to meet these obligations.

Long-Term Debt Imposes Financing Risk Because It