One advantage of issuing bonds instead of stock is that:
A)Interest is tax deductible,whereas dividends are not.
B)Bonds have a longer maturity date.
C)Interest rates are lower than dividend rates.
D)The issuance of bonds does not affect earnings per share.

Question

Quizplus · Accepted Answer

Interest paid on bonds is tax deductible for the issuing company, whereas dividends paid on stock are not tax deductible. This makes issuing bonds a more tax-efficient way for companies to raise capital compared to issuing stock.

One Advantage of Issuing Bonds Instead of Stock Is That